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The rising AI technology was VCs’ favourite segment to invest in, and the world saw a lot of new startups raising funds and making breakthroughs through 2020 and 2021. But by Q2 2022, global AI funding declined a massive 44% from $33.6 billion to $18.8 billion year-on-year.
The downward spiral can be a result of the apparent global funding winter due to the onset of recession, which resulted in a lot of valuations getting corrected. The VCs reported sparse growth from AI startups, which was followed by many tech startups shutting down operations.
Here are a few AI startups that unfortunately had to shut shop in 2022.
The autonomous vehicle technology startup, Argo.AI, shutdown in October. In 2017, the company received investment of $1 billion from Ford and was also backed by VW but eventually had to stop its operations due to cash burn and failure to attract investors. This was despite the great hype around autonomous vehicles with VCs pouring funds into Google’s self-driving project and Tesla making developments in their full self-driving capabilities.
Founded by Adam Smith in 2014, Kite, an AI-assisted tool to write code quickly became developers’ favourite. Unfortunately in November, they announced that they are shutting down their operations. This auto code platform had been running long before GitHub Copilot became mainstream. Smith said that Kite failed because it was not able to prove to be the first mover in using AI for coding and fell short in being ready with tech. It also struggled to build a business around the idea.
Launched by SmartLabs in 2005, Insteon, the home-automation company shut down abruptly in April. The company had announced partnership with Microsoft to sell its kits at its stores and also announced two launch partners for Apple’s HomeKit platform, but shut down without any prior warning. After a few weeks of closure, the company blamed the sudden liquidation on the pandemic, in an update on its website. Though the goal was to start selling in March, the company had to shut down and other compatible technologies like Z-Wave and Zigbee took over the industry. However, there are unconfirmed reports of the company re-starting its operations.
A California-based company, with the aim of building autonomous, affordable, and flying vehicles, KittyHawk stopped its operations in September. In 2021, the company started laying-off its team of 70 people and cancelled their original Flyer project after founder Damon Vander Lind parted ways. Even after Lind’s departure, the company was making strides in the field. It acquired 3D Robotics and seemed ready to start the vertical take-off and landing aircraft. Eventually, it had to stop its operations and came to a halt.
In May, the Israeli AI startup, BeyondMinds, started notifying its employees of an impending shutdown after the investors started to predict downfalls in the tech market and believed that it would not be able to raise further funding. One of the founders, Rotem Alaluf, went on to start another company, Wand.AI with some of the other staff of BeyondMinds.
Founded by Roey Mechrez and Rotem Alaluf in 2018, the Tel Aviv company was trying to solve the biggest challenge in AI, transforming a ‘model centric’ approach for solving real world production processes by building a production centric AI platform.