Israel’s Artificial Intelligence Landscape 2018

Israel’s Artificial Intelligence (AI) startup ecosystem has raised over $7.5 billion cumulatively and is undergoing explosive growth, characterized by a major influx of establishments and talent, forming what could be considered the global leader of AI over the next five years. Notwithstanding their absent national agenda and budget, Israel has already earmarked the largest AI exit to date (Mobileye — 15.3B) and boasts a substantial and growing cluster of startups utilizing and developing AI technologies. The below showcases Israel’s monstrous ecosystem of AI startups (including technologies such as Machine , Deep Learning, Computer Vision, Natural Language Processing, Robotics, Speech Recognition, etc.) — those developing or utilizing AI technologies central to their core offering. The startups and their corresponding information can be found . infographic Learning here Here’s the top 20 highlights of the ecosystem developments to date: , of which 445 startups have raised one or more funding rounds. Over the last five years, an average of 140 startups are established annually. There are over 950 active startups utilizing or developing AI technologies , up 70% from 2016, and have already raised $1.5 billion for the 2018 year to date, tracking almost identically from the previous period. Deal volume peaked at 207 investments in 2017, up 19% from 2016, but is tracking lower as of the 2018 year to date at 133 deals, down from 158 over the previous period. AI startups raised $1.94 billion funds in 2017 exhibited the most growth, up 64% and 32% respectively from 2016 to 2017. Seed rounds totaled 59 deals in 2017 up from 56 deals from 2016, but 2018 is on track to surpass 2017 for all rounds. A, B and C rounds have already surpassed the previous period, tracking at 42, 21 and 5 deals respectively. And Seed deals are tracking at 41 deals, just under the 42 seed deal count for the previous period. Also, A rounds for the 2018 year to date have reached an inflection point by surpassing the number of Seed rounds, which suggests A rounds will register higher than Seed round volume for the 2018 year — uncharted territory. Deal volume for B and A rounds , while 16% offer a mixed offering of hardware and software. 84% of AI startups offer a purely software-based solution , while 28% are consumer-facing (B2C). 71% of startups are business-facing (B2B) , of which 21% are utilizing deep learning technologies**.** 13% are using computer vision technologies and 11% are using natural language processing. Only 4% are working with robotics and process automation, while 3% are using speech recognition technologies. 51% of AI startups are utilizing machine learning technologies Over the last five years, AI exits averaged a cool $121 million per deal and sell for 5.6 times their total funding at the date of exit, but the multiple has climbed to 8.3 times for the 2018 calendar year to date. On average, AI startups raised $17.5M before exiting. Cumulative Israeli AI startup exits total nearly $4.4 billion over 66 exits. startup following their establishment, and the duration is trending downwards. Excluding outliers, the exit multiples exhibit a positive linear relationship in relation to the startup’s lifespan after 4 years of operation, and suggests a ‘sweet spot’ between 6 and 8 years, yielding the highest return multiple during that time period. Multiples taper off after 8 years and decline with additional time. The typical startup takes 6.0 years to exit . Only two exits (Mobileye’s IPO and Datorama’s acquisition by Salesforce) are over 500M, while the remaining deals are below 100M (40% are between 10M and 50M). Nearly one third of exits are comprised of deals between 100M — 500M , namely computer vision core technologies and computing hardware, followed by marketing advanced targeting, analytics and mobile marketing segments. Enterprise cyber security and automotive autonomous driving systems follows suit. The most sought after Israeli sector by way of exit activity are AI technology offerings , engineers and data scientists working on AI research, development and integration (software and hardware included). 64% of Israeli AI talent are employed by startups, while 31% are employed by a combined 58 multinational corporations with dedicated AI centers/labs in Israel. The rest are employed by Israeli corporations and universities. Israel is a hotbed for AI talent, tracking at almost 3,935 developers , employing nearly 270 AI employees, followed by IBM at almost 130 AI employees. Combined, they account for almost a third of AI talent employed by multinationals. Intel Corporation leads the multinationals , however, females account for almost 30% of currently enrolled AI PhD students. Females account for 9% of the total Israeli AI talent pool institutions with 41 currently enrolled PhD students studying AI related disciplines. Technion university placed second with 30 currently enrolled AI PhDs students, followed by Tel Aviv University (22). Hebrew University leads the Israeli secondary education . Early stage startups with A round funding or less funding spend between $350K — $1M on annual total AI related expenses, while startups with B funding or more range between $1.5M — $2.3M per year. The average AI employee in Israel earns between $109K — $140K annually in Israel with 26 total investments, excluding follow-on investments. Jerusalem Venture Partners ranks second, followed by iAngels, Pitango Venture Capital and Vertex Ventures. OurCrowd is the most active investor in AI startups , Microsoft ScaleUP TLV dominates the landscape with 33 participating startups included in the AI landscape. For accelerators , used by 79% of startups. C++ ranks second, used by 30% of startups, followed by Java (25%) and R (14%). The top programming language used for AI development is Python , 89% of startups use a combination of CPUs and GPUs for their computing needs. 55% of startups use GPUs exclusively. 10% of startups use DSPs, 6% use SoCs, and 5% use FPGAs and ASICs. For computing power while searching for data partners. 28% of AI startups are still building their algorithms As the world is racing to achieve AI supremacy, Israel is categorically carving its position at the top stage. Codified intelligence is deep-rooted in Israel, and it will strongly define the country’s achievements in the future to come. Download the comprehensive report on Israel’s State of AI for more detailed information accompanying this post at . www.startuphub.ai If you notice any missing companies, please email danielsinger27@gmail.com. Note: The process of categorization was based on opinion at times and may have errors. The list is not exhaustive. All rights reserved for the infographic above under Daniel Singer, 2018. Share this infographic, but cite and credit appropriately back to this post. For commercial intent, please inquire for explicit consent.