Venture capitalists are investing heavily in the potential of disruptive technology
The potential of artificial intelligence (AI) to impact vast areas of our lives has not gone unnoticed in the venture capital world.
Investment in AI by venture capitalists (VCs) is widespread with almost three quarters of respondents to a Pitchbook poll saying they have invested recently.
A caveat: the survey was conducted at this week’s Collision event in Toronto, one of the world’s largest and important tech deal-making events, so you would expect these VCs to be into the hottest technology assets.
Two thirds of respondents said AI and machine learning has the potential to be the most disruptive technology in the next five to 10 years, with this dominating investment ahead of fintech, blockchain, climate tech, and digital health-tech also prominent.
Almost 100 VCs responded to the survey which also highlights that VC activity is subdued.
"We've seen venture activity decline in response to ongoing headwinds in the market," said Kyle Stanford, lead VC analyst at PitchBook. "VC fundraising could be on track to drop to levels not seen since 2017, in line with investor sentiment seen in the survey results, and dealmaking activity recently fell below the long-term growth trendline.”
That said, Stanford says there is still significant dry powder available to deploy and 89% of respondents said they are allocating at least half of their fund to new investments.
VC insights
The Canadian VC ecosystem, while echoing the global slowdown in the space, is on target to hit levels of investing in startups in line with 2019.
Canadian startups raised $3.5 billion in the first two quarters of the year, suggesting a return to more normal levels following 2022’s $6.3 billion and 2021’s $7.8 billion.
However, 3.4% of VCs said that they have halted investments for the time being.
Women-led startups are attracting high levels of investment with two-thirds of VCs having invested at least 25% of their capital into women-led startups in the last 18 months.
North America remains the most exciting region for investment among VCs, climbing to 69% of investors (up from 58% in 2022) with other regions some way behind: Asia (11.7%), Europe (11.6%), Africa (4.7%) and Latin America (3.5%).
When asked about fundraising activity, 59% of investors said they were not currently in the market raising a new fund and over half (54%) believe it will become more difficult to raise capital from LPs in the next twelve months.
