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Deep Dive: Why Are Non-Tech Companies Betting Big On AI Startups?


Deep Dive: Why Are Non-Tech Companies Betting Big On AI Startups?

Harshajit Sarmah


The artificial intelligence race is real as the world is already witnessing the sheer impact of artificial intelligence on the industry. Reports suggest that the global GDP will rise by 14% in 2030 and the major reason behind this is the accelerating development and take-up of AI. The report also suggests that the productivity gains from businesses automating processes, augmenting their existing labour force with AI technologies is also going to get impacted for the good.



Rise In AI Startup Acquisitions

The rate of AI startups getting acquired has grown by 38% every year since 2010. Companies who are leading this movement are the ones who acquire AI startups to make the best of the talent, ideas, and resources. This is beneficial for startups, ecosystem and even for the company. 

For example, Apple has acquired 20 AI startups since 2010 and these acquisitions also include companies who were the primes behind Apple’s top-notch features like Siri and FaceID.

Amazon, Facebook, Google, Microsoft, and Intel also have at least seven startups each which are working on some of the most sought after technologies like CV, NLP etc.

When AI Is A Game Changer For Companies Of Any Domain

AI is undoubtedly going to be a key player in the coming years when it comes to driving businesses. And that is why even non-tech companies are emerging in the AI domain with an overwhelming majority of AI startup purchases. They have started to realise the imperativeness of having AI in the infrastructure or at least the essence of AI.

Two of the big names are McDonald’s and Nike. McDonald’s recently acquired a startup called Apprente (a voice AI system focused on fast-food ordering). It is not the first time the Golden Arches have doubles down on tech — earlier this year, the company has also spent over $300 million on a big data startup called Dynamic Yield.

Nike, on the other hand, has acquired Boston-based predictive analytics company Celect. While the financial terms weren't disclosed, the company has stated that Celect’s technology would be integrated into Nike’s mobile apps and websites. This would not only help the athletic footwear and apparel company to predict what styles of sneakers and apparel customers want but would also help in predicting the “when” and “from where.”

Whenever there is an AI startup, the entire ecosystem wants it to be something that can disrupt and make a difference. Startup culture is something where millennials show interest in terms of work, and when a startup is something that is intriguing, it tends to attract a lot of talent to onboard. Furthermore, the big-wigs are always on the lookout — they have the capital, they have the resources, they basically have everything that an AI startup would need to thrive. And this is what drives the acquisition game of non-tech companies.

Indian AI Startup Acquisitions

It is not only the names from outside India that have been marking their territories in the AI domain, but Indian companies are also going all out to get that AI spot. And Reliance is definitely one of the best examples. The Indian multinational conglomerate has acquired three of the top-notch AI startups in 2018 and 2019 — Haptik, Reverie, and Embibe.

See Also

If you look at the entire acquisition scenario of Reliance, it has acquired these AI startups to make the best out of their specific technologies and innovation in different fields. Haptik is acquired with a vision to make the best of its AI chatbot, that is considered to be one of the leading chatbot platforms for consumers, publishers and enterprises. While on the other hand, Reverie was acquired to go big with its language localization. Reverie is a  cloud-based, language-as-a-service platform that helps apps and content go multilingual. And the acquisition of Embibe, which is an AI-powered online education platform, was acquired to take AI-based education to the next level. The company has also stated it would invest an additional amount of $180 million over the next three years to strengthen its R&D work in AI.

Furthermore, companies like Swiggy, Flipkart, Paytm, Oyo and several other homegrown players are also there in the list who have invested in or acquired AI startups to boost their presence in AI.

Outlook

The imperativeness of AI in today’s business world is really high and as a result, the acquisitions of AI startups by non-tech giants are increasing. And why not, after all these AI acquisitions promise the development of tools and services that can help these companies to thrive and grab the bigger market.

And if you look at it as a strategy, there are companies that are solely relying on other AI companies or startups to take care of their AI needs. However, these acquisitions also pose challenges for big companies, mostly in terms of maintaining culture. When we talk about a startup, culture is something that strikes our head and if big companies fail to maintain that culture in the startup, the productivity would definitely go down.



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