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What Is Asia’s Role in the Future of Artificial Intelligence Investing?

by Moses Chan

  • 02 Jul 2019
  • PE
  • VC

Artificial intelligence (AI) has been riding a worldwide wave in recent years. As application increases, AI is transforming our daily lives across industries ranging from healthcare to finance and from automotive to retail sectors. AI has significantly boosted the global economy, led mainly by activity in Europe and the US. Notwithstanding, development and investment in AI, and government support for such initiatives, has also been widely promoted in Asia. What role will Asia play in the future development of the sector?

Growth and Opportunity
Asia has certainly proved itself a promising region for AI investment. As seen in the chart below, total venture capital investment in the AI sector in Asia has grown sevenfold in the past three years to reach $6.1bn, with 223 deals recorded in 2018. Notably, China has dominated the market, with 163 deals recorded in 2018, worth an aggregate $5.6bn – this accounted for 93% of the total value of deals in the AI sector in Asia that year. Among these was SenseTime Group Limited’s Series D funding which raised $1bn from Softbank China Venture Capital and increased its value to $6bn. SenseTime Group Limited is an AI company focused on computer vision and deep learning, and is backed by several private equity firms including Qualcomm Ventures, IDG Capital and CDH Investments.

*Figures exclude add-ons, grants, mergers, secondary stock purchases and venture debt.

The Value of Government Support
To further push the level of investment in Asian countries, government support for AI development is key. The Chinese Government released the ‘New Generation Artificial Intelligence Development Plan’ in 2017, which outlines China’s aims to become the world-leader in AI by 2030, building a domestic AI industry worth $150bn. Elsewhere in Asia, Singapore has identified AI as one of four frontier technologies and launched a national program, AI Singapore, which will fund up to SGD 150mn to catalyze, synergize and boost Singapore’s AI capabilities. In March 2017, Japan’s strategic council also launched a plan for AI technology, which includes an industrialization roadmap that incorporates AI. On the whole, government support across Asia has cultivated a more favourable environment for AI development, which in turn benefits both fund managers and investors interested in the sector.

New Kid in Town
Given the substantial developments in the AI sector in Asia in recent years, and the fact that Asian governments have fostered a competitive environment for professional training and innovation, it is clear that Asia is striving to affirm its position as a leader in the AI sector. In a market traditionally led by the US and Europe, Asia could well be on its way to disrupting the status quo.

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