- Covid-hit 2020 saw the announcement of some big-ticket VC deals due to which deal value increased by 18.7% compared to 2019.
The number of mergers and acquisitions (M&A) deals in the AI space grew by six per cent year on year in 2020 but the corresponding value shrank by 17.3 per cent.
While 2019 saw the announcement of around sixty $100 million-plus deals, 2020 saw the announcement of around fifty $100 million-plus deals.
According to GlobalData, venture capital funding deal volume in the AI space showed consistent growth from 2016-2019 until 2020 when the Covid-19 pandemic reversed the trend and deal volume shrank by 7.1 per cent.
However, funding value managed to maintain the growth trajectory.
On the other hand, M&A deal volume registered consistent growth during 2016-2020, while M&A deal value continued to fluctuate.
After recovering from the decline in 2017, M&A deal value registered growth in 2018 and 2019 before declining again in 2020.
Despite the fluctuation in deal activity, there is a notable growth when comparing 2020 numbers with 2016. VC deal volume and value increased at a compound annual growth rate of 19.4 per cent and 39.9 per cent, respectively, during 2016-2020.
Significant investment boost
VC deal volume in the AI space shrank by 7.1 per cent from 3,075 in 2019 to 2,856 deals in 2020. Despite the decline in volume, the Covid-hit 2020 saw the announcement of some big-ticket VC deals due to which deal value increased by 18.7 per cent compared to 2019.
Some of the notable VC deals announced during 2020 included $1.9 billion secured by SpaceX and $1.7 billion secured by Manbang Group.
On the other hand, M&A deal volume and value increased at a CAGR of 44 per cent and 5.6 per cent, respectively, during the past five years.
Aurojyoti Bose, Lead Analyst at GlobalData, said that despite the fluctuating trend, investors’ interest and deal-making sentiments for AI grew significantly in the past few years.
“With global organisations replacing their conventional operations with disruptive technologies such as AI, space managed to gain a significant investment boost,” he said.