AI Investment Trends: Time to shine

Global state of AI Investment In the fast-paced world of investment, the tides are shifting as we head toward 2025. Sectors like Blockchain/Web3 and MedTech, which once had all the hype, are now cooling off, making way for AI and Big Data to take center stage. A striking 30% of investors are now channelling their enthusiasm into this sector. But it’s not just AI/Big Data making waves—B2B Software and Climate Tech are also catching eyes for their potential to grow and innovate. Amid this shift, the public markets have been buzzing with the meteoric rise of AI chipmaker Nvidia. Their stock has skyrocketed, setting a record for the largest single-day market cap gain in Nasdaq history! This surge has sparked conversations about whether we’re heading for an AI bubble, fuelling debates among investors and analysts. As we navigate these evolving trends, it’s evident that the investment world is increasingly focused on sectors poised to redefine our future. How did Aussies react to this? Leading venture capital research firms, PitchBook and Alternatives.pe, have compiled data on global and local funding for AI-related startups. Their findings reveal a trend: investors are increasingly putting their chips on big winners instead of spreading funds around. However, even as AI is booming globally, general investment in Australia is on the decline, especially within the tech venture capital sector. PitchBook's study, which spanned from 2017 to 2023, shows that investment deals were on a steady climb until a sudden spike in 2021. Unfortunately, this spike didn’t quite hit the Australian market. Locally, investment jumped from $US495.7 million in 2021 to $US721.7 million in 2022, before taking a nosedive to $US329.3 million in 2023. This data highlights that while AI investment is skyrocketing globally, the Australian market is still playing catch-up. The spike in 2021 shows global enthusiasm, but the sharp decline in Australia suggests that local investors are more cautious, or perhaps slower to embrace AI's full potential. For Australian startups, this could mean there's an untapped opportunity—those who move quickly and innovate could position themselves ahead of the curve in a market that’s still finding its footing. AI-assisted vs AI-dominant When it comes to AI, not all companies are created equal. You’ve got your AI-assisted companies, where AI is like the cool sidekick, making everything a bit better, but not exactly running the show. Then there are AI-dominant companies—the ones where AI is the star of the show, the main event, the Beyoncé of tech. In Australia, it seems we're playing it safe, with more deals going to those AI-assisted companies. Globally, however, AI-dominant companies are attracting more substantial investment, indicating a belief in their long-term potential. Despite recent dips in investment, there are promising signs that Australia is ripe for AI innovation. Australia's AI market is projected to reach $3.6 billion by 2027(1), growing at a compound annual growth rate (CAGR) of 15.80%(2). Additionally, the country’s close ties to the Asia-Pacific region offer a unique gateway to markets that lead spending and research in the sector. So, what does this mean for you? Well, if you’re looking to make a splash in the industry, this is your moment. Australia’s got a gap, and it’s just begging for some fresh, young minds to fill it. Whether you’re into AI-assisted or AI-dominant, there’s room to get creative and shake things up. Conclusion The verdict is in: AI is set to be a major player in Australia’s market. Despite recent dips in investment, there are promising signs that Australia is ripe for AI innovation. The country boasts a strong tech talent pool, world-class research institutions, and a growing focus on digital transformation across industries. For young innovators, this presents a golden opportunity to fill the existing gap. With global trends pointing to AI's transformative potential, Australia is poised to be a key player—if the right minds step up to the challenge. Who knows—maybe you could be the next big thing! References: 1 – https://www.statista.com/outlook/tmo/artificial-intelligence/australia 2 - https://www.imarcgroup.com/australia-artificial-intelligence-market