
Why AI?
Artificial Intelligence (AI) software performs complex tasks of identifying patterns and producing insights from data. The business of AI, while quietly advancing in relative obscurity for decades, has finally emerged into an entirely new industry with its own multi-billion dollar investments, technologies and potential profits.
It is projected that the value of M&A and Private Placement transactions in AI over the next 5 years will exceed that of the previous 50 years, with several acquisitions topping the $1 billion mark.
AI refers to an artificial creation of human-like intelligence that can learn, reason, plan, perceive or process natural language. These traits allow AI to bring immense opportunities in the medical, industrial, educational and business fields, among others.
As with many sudden disruptions, the emergence of AI is the product of not just a single enabling factor that could be predicted with linear projections, but combination of multiple enabling factors.

AI Industry Growth
The rapid growth of the AI sector is the result of a perfect storm of factors: supply of parallel processing power via data centers, vast creation of big data and competitive needs of businesses across multiple sectors that recognize the need for AI to augment their productivity.
This combination of factors is expected to generate a virtuous cycle of advances in AI over the next decade, with even the more conservative estimates of growth are as high at 50% per year from 2017 to 2025.
Additionally, as sensors are embedded virtually in every sector (including industry, medicine, transportation, security and more) as the IoT that collects and stores data, these trends are expected to intensify. AI innovation disrupts many industries at once, hence M&A activities in AI will present a number of novel buyer-seller match-ups.
Leading digital economies are acting to grow their national AI capabilities and subsequent market shares.

AI & Government
United States: The government invested US$1.1 billion in unclassified R&D for AI systems in 2015 and an estimated US$1.2 billion in 2016. The Information and Intelligence Systems Department of the National Science Foundation and the programs related to AI from the DARPA are reported to have been around US$300m-$400m a year for the last 15 years. The 2016 White House reports include strategic planning for National Artificial Intelligence Research and Development.
China: China’s ambition is to create a US$15 billion AI market by 2018 and its government prepares a comprehensive AI strategy for this purpose.
South Korea: The government announced that it will invest 1 trillion won in AI research over the next five years, a 55% increase in annual funding for AI.
Germany: The Research Center for AI (DFKI) was founded in 1988 and has an annual budget of €41m. It is one of the world’s largest AI labs, with nearly 500 researchers.
