Newsletter #4: AI investment activity, a platform perspective.

This week’s themes are ‘physical cloud’ and quantified self. To illustrate these themes one may explore at least three companies. Braincube and Kitov Systems, that both improve manufacturing processes have announced $14M and $10M investment rounds respectively. While Flo, a consumer health company, raised $12M at $200M valuation.

If you want to skip my analysis and jump straight to data, go to the end of the note to find a table and a link on a Google spreadsheet, that contains data on featured companies and links to sources.

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Newsletter 08.10.2018–14.10.2018

Key themes

• AI-powered companies digitise physical infrastructure and create what Christopher Mims of WSJ called the ‘physical cloud’, an ecosystem ‘…that functions like the internet itself’. Tech allows creation of digital twins of complex physical systems, that become easily manageable and copied. For example, Braincube offers manufacturing companies an opportunity ‘… to identify your best performing operating conditions and reproduce them so that you regularly obtain your best results’. Digitalisation allows physical systems to be easier deployed. For instance, Kitov System’s manufacturing line visual inspection solutions require just a few hours to learn a new product (Pic. 1);

Pic 1. Kitov’s robotic inspection system

• People increasingly create their own digital twins by digitalising and quantifying signals from their bodies. While some entrepreneurs develop clinical decision support solutions, like one by Renalytix AI, others build consumer apps. Healthcare startups, powered by AI, go outside hospitals and become an element of everyday life. Look at Flo, that develops mobile products for women’s health, a period tracker for example. Flo, that has raised $20M this week, collects and analyse tones of data from 22 million women who use it daily;
• Healthcare is not the only one sector where humans and our behaviour sit at the centre of everything. Those who build cars, drones and other autonomous agents also want to know more about how humans, counterparts of these agents, behave. Perceptive Automtata, that disclosed $16M investment round this week, builds a behavioural prediction software that will allow autonomous systems to anticipate human reactions;
• What we are beginning to see is an explosion in collection of human-related data. Previously, being predominantly collected by healthcare and advertising sectors, now data on our body, behaviour, etc. is more actively collected by consumer devices, various autonomous vehicles, systems that control environment in our offices and others. I will not be surprised if healthcare applications will be found for these new data sets. Imagine, that trying to diagnose depression, a doctor will be able to explore patterns of how a patient interacts with co-workers (derived from CCTV footage), or how his/her driving style evolved (prided by sensors from a car).

Tech platforms*

These week demonstrates multiple examples of tech platforms. Among them:

• Flo, Braincube, Coord, Understory, Datalogue, and Machnify build platforms around data and algorithms. Some of these platforms, like Understory, develop own infrastructure to collect data, weather stations, for example (Pic. 2). While others solve a problem via aggregating and analysing data from multiple sources. For instance, Coord joins data from various transportation systems;

Pic 2. Understory’s sensors

• NIO, an electric car manufacturer, that IPOed this week, may be viewed as a platform that accommodates emerging technologies from the autonomous driving stack.

Business platforms**

AI startups, that are featured in this newsletter, demonstrate that a potential to build platforms exists in pretty much any industry. AI tech acts as a glue and connects various elements of supply/value chains, sometimes in a way that was hardly doable earlier.

• Flo may scale up an existing practice of using consumers’ data for drug discovery by partnering with biotech companies. While Understory introduces similar service to insurance companies and companies from other industries;
• Coord strives to achieve such a level of integration between private and public transportation networks that was unseen before. It builds ‘… APIs that allow software developers to integrate up-to-date data about transportation infrastructure and services’;
• Wasteless combines AI and RFID technologies in order to enable grocery retailers to employ expiration date pricing and also to change their relationships with suppliers.

More examples on building tech and business platforms as well as data on featured startups are below in the Chart 1.

Chart 1. AI companies that disclosed funding during the week 08.10.2018–14.10.2018, $M

Data is here (Google spreadsheet)

All data is from open sources and all conclusions/ideas/analysis are built only on publicly available information. For data sources see the Google spreadsheet.

*A company is defined as a platform in tech sense if someone can build up on it. I identify a comapny as a tech platform purely based on public sources, so if I misunderstood your startup, please do let me know.

**A company is positioned across a value chain and is considered as a ‘business platform’ if it has distinctive offers for several elements of this value/supply chain. If I misunderstood the value proposition of your startup, please do let me know.

This newsletter does not intend to cover all AI transactions, but covers just four themes in a limited set of geographies.