Artificial Intelligence technologies in Israel saw significant growth in 2018, in the number of companies raising funding, the amounts invested, as well as new products released, a new report by Start-Up Nation Central shows.
Israel is home to a vibrant AI ecosystem that grew from 512 companies in 2014 to 1,150 by the end of 2018 (120% increase in 4 years). These include companies that develop core AI technologies as well as companies that utilize AI-technologies for their vertical-related products and services, such as healthcare, cyber security, autonomous driving, among others.
Multinationals active in Israeli tech also had a big AI year: Intel announced it was investing $11B in a new chip plant in Kiryat Gat, a southern Israeli city, while also establishing a new Center for Artificial Intelligence with the Technion Israel Institute of Technology, in Haifa. Israel-based R&D centers played a significant role in new AI products unveiled during 2018 by Google (Duplex), IBM (Debater), and Microsoft (Healthcare Bot). Nvidia, a chipmaker vying for the global AI chip market with Intel, opened an AI R&D center in Israel in October.
Start-Up Nation Central’s report shows that in 2018, AI-related companies accounted for 17% of the total number of 6,673 active Israeli tech companies in Israel tracked by Start-Up Nation Finder, SNC’s innovation discovery platform. Strikingly, 32% of all funding rounds and 37% of the total capital raised went to AI-related companies, representing a 94% increase from the number of funding rounds raised by AI-related companies in 2014, and an 85% increase in the amount of capital raised. The total capital raised by AI companies in 2018 ($2.25B) more than tripled from the amount raised in 2014 ($516M) —-a peak year in terms of capital raised by Israeli AI companies.
Digital health companies raised $543M in 2018, with 85% of those companies utilizing some form of AI (42 out of 70 investment rounds in the digital health industry went to AI companies.
Prominent funding rounds raised by companies making use of AI technologies include Trax Image Recognition (computer vision for retail), and by core-AI companies such as Habana Labs, which develops AI processors, Hailo (deep learning on edge devices), and Allegro.AI (deep learning as a service). Allegro’s new investors include Hyundai CRADLE (Hyundai Motor Company’s corporate venture arm), and Samsung Catalyst Fund.
2018 was also a good year for AI-related exits, with Datorama’s acquisition by Salesforce for $850M as a prominent deal (Datorama’s marketing analytics platform is based on AI). Other significant acquisitions included “virtual nutritionist” company Nutrino for a reported $100M by Medtronic, and computer vision company BriefCamfor $90M by Canon.