Artificial intelligence (AI) has taken the world by storm since ChatGPT spread across Western markets in late 2022. Yet how far has AI travelled in that time? Where could things go and which innovations should investors look out for? In this market update, our team at Bure Valley Group offers a round-up of key players, trends, opportunities and risks to consider in 2024. We hope these insights are useful and please contact us for more information about our early-stage investment opportunities.
Market Overview
In our current historical moment, “AI” has widely become synonymous with “generative AI” which designates technologies which use generative models to output text, images and other media. Yet AI is a far wider concept than this. In short, it refers to technologies which enable machines to perform “traditionally human” tasks such as data gathering and other cognitive functions. Here, the global market has expanded significantly in recent years. In 2022, it was valued at USD 136.55 billion. Forecasts predict impressive expansion in the years ahead, with a compound annual growth rate (CAGR) of 37.3% mapped for 2023-30.
Major Components and Trends
AI continues to spark innovations, making accurate segmentation difficult. Certainly, AI has appeared in a wide range of verticals by 2024 including finance, healthcare, retail and the automotive industry. By component, AI can be divided into hardware, software and services – with the latter further subdivided (e.g. consulting and training). The market also be segmented by technology such as generative AI, deep learning and machine learning. These also have their various sub-branches. For instance, generative AI can be cut into transformers, variational autoencoders (VAE) and diffusion networks.
In 2024, the global AI market has remained largely bifurcated by deployment into on-premises and cloud. It is also characterised by a high level of merger and acquisition (M&A) activity by large market leaders who are keen to consolidate in a rapidly expanding market – securing new technologies and talent along the way. In November 2022, for instance, Deloitte announced its acquisition of SFL Scientific – a leading AI strategy and data science consulting firm – to expand its capabilities in deep learning.
Tech giants like Amazon.com, Google, and Apple are still investing heavily in AI. In December last year, for example, Google released its latest Gemini AI model – its “largest and most capable” yet – which claimed to outperform human experts on MMLU (Massive Multitask Language Understanding) as well as OpenAI’s ChatGPT. Google’s rivals are yet to respond to Gemini’s standout native multimodal characteristic.
Risks & opportunities
Regulation and data security remain two key issues facing AI innovation in 2024. In January 2024, a group of visual artists brought further evidence to court against Midjourney AI developers, accusing them of copyright infringement (to build text-to-image AI tools) and discussing ways to “launder” datasets to avoid legal problems. Other high-profile lawsuits are still ongoing. Getty Images is suing Stability AI in a London Court over “unlawful image scraping”, and authors like George R.R. Martin are fighting a case against OpenAI.
Investors should be aware that the relationship between AI and copyright law has still not been fully settled in 2024. This issue pertains more heavily to generative AI, yet data security concerns are also relevant to the wider AI space. “Model poisoning”, for instance, refers to the risk of malicious actors infiltrating an AI system – leading it to produce erroneous results. With the recent Post Office scandal high in public discourse, many people are understandably more concerned about the dangers of faulty software.
Whilst these important issues certainly need addressing, they are unlikely to derail the significant advancement of global AI innovation in the years ahead. Creative professionals increasingly use generative AI in their workflows, automating many monotonous tasks (e.g. cropping images) and enabling them to work faster. AI can reduce the risk of human error and draw more robust conclusions from big data – facilitating quick decision-making. AI-powered digital assistants, such as website chatbots, can mitigate overheads by reducing the need for human customer service staff. AI systems also benefit from 24/7 availability, giving organisations greater access to continuous productivity.
AI is an ideal “hunting ground” for early-stage investors looking for their next high-growth opportunity. In the UK, a thriving ecosystem of AI startups has been emerging with little sign of slowing down. Humanising Autonomy, for instance, is a London-based startup which has been facilitating AI-powered vehicle safety and traffic control since 2017. Its most recent financing round raised $11m in Series A funding, bringing its total from investors to $17.2m.
Intelistyle assists shoppers with personalised fashion decisions – providing customers with an AI equivalent of a human stylist. Major retailers such as H&M, Tommy Hilfiger and D&G have already adopted the technology – which won the Best AI Product in Fashion in the 2021 CogX awards. A third case study is Sprout.ai; a fintech startup using AI to help claimants and insurers in the process of submitting and processing insurance claims. This company has raised £8 million in Series A funding and has already been adopted by large financial services players such as Zurich and MetLife.
Invitation
If you are interested in expanding your portfolio into these kinds of exciting spheres of investing, then we invite you to get in touch with us here at Bure Valley and to consider joining our exclusive investor network:
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