<p>Q&A If you have questions, you can ask them at anytime via the "Questions tab." We will do our best to answer them live and will also save a few to answer at the end. Twitter Share interesting insights or data points you hear on Twitter using the hashtag #CBIAI. We are @cbinsights. The Artificial Intelligence (AI) Webinar will begin shortly Tuesday, June 28, 2016 1 PM NYC 1 Webinar recording will be distributed immediately after The presentation will also be sent to you. Feel free to share with colleagues. The resolution of some slides may be suboptimal due to the webinar software. Those slides will look fine in the presentation that we send you. During the webinar, technical help is also available http://support.citrixonline.com/en_US/Webinar 2 ABOUT OUR PRESENTER NICK PAPPAGEORGE 3 Tech Industry Analyst, CB Insights Published research and data analysis that have been cited in Forbes, Fortune, Wired, Quartz, Re/Code, and Business Insider, among other publications Focuses on IoT, AR/VR, drones, and wearables research Formerly worked at MakerBot Industries (3D printing) in a research role Graduate of Hamilton College @NpappaG npappageorge@cbinsights.com JOIN THE CONVERSATION 4 Share your favorite insights and data points on Twitter @CBInsights #CBIAI ABOUT CB INSIGHTS A unique combination of data science and machine learning to help you see what's next. About CB Insights Backed by RSTP and the National Science Foundation, CB Insights uses data science and machine learning to help our customers predict what's nexttheir next customer, their next investment, the next market they should attack, the next move of their competitor or the next company they should acquire. The world's leading global corporations including the likes of Cisco, Salesforce, Castrol and Gartner as well as top tier VCs including, NEA, Upfront Ventures, RRE, and FirstMark Capital rely on CB Insights to make decisions based on data, not decibels. To make your life easier, visit http://www.cbinsights.com "A detailed discussion of data collection and how the company parses them is written by CB Insights' data scientists; it convincingly tells the story of scalability and accuracy for what they call "The Cruncher." From "Predictive Analytics And Novel Visualization Draw Customers To 'Must Have' Data" published April 8, 2015 5 WHAT WE'LL COVER TODAY 2 Focus: Healthcare Investment trends, companies to watch 3 5 1 6 4 Other Hot Areas Drilling into Ads, B.I., and opportune areas for investment Investment Trends & Players Equity funding to AI, deal share by stage, and corporates Where AI Is Going Subindustry opportunities, big exits, and industry news Definitions of AI What it is, shape of industry, verticals where it's being applied ARTIFICIAL INTELLIGENCE: THE NEW TECH FOCUS "In the long run, I think we will evolve in computing from a mobile-first to an AI-first world." Sundar Pichai CEO, Google Inc. "I think advances in AI can help save peoples lives." Mark Zuckerberg CEO, Facebook 7 "It's the first inning. It might even be the first guys up at bat. We're on the edge of the golden age [of AI]." Jeff Bezos CEO, Amazon "Artificial intelligence will continue to be an unceasing core for Baidu Innovations." Robin Li CEO, Baidu Our definition of AI: companies applying AI solutions to verticals like healthcare, advertising, and finance as well as those developing general- purpose AI tech. 8 WHAT IS AI? KNOW YOUR BUZZWORDS 9 Definition of AI: a branch of computer science trying to get computers to exhibit intelligence. Machine Learning is a range of techniques for computers to perform cognitive functions Deep Learning (a type of Machine Learning that uses layers of neural networks) has been the most accurate and productive technique in AI research Check out Frank Chen of a16z's recent video on the subject. A.I. Machine Learning Deep Learning WHAT DOES AI LOOK LIKE? 10 AI techniques will make every application smarter, faster, and better suited for our needs. Most of us already use deep learning and machine learning products every single day. Buzzfeed headlines, Airbnb suggested listing prices, and Facebook's M assistant all use deep learning and machine learning algorithms. 11 A FEW SUB-INDUSTRIES USING AI TECHNOLOGIES: Healthcare Business Intelligence Finance Cybersecurity Internet of Things Advertising, Sales & Marketing Autonomous Vehicles Personal Assistants/Productivity E-Commerce Agriculture Robotics Legal Education EMERGING AI APPLICATIONS 12 AI TRENDS 13 AI TRENDS 14 AI TRENDS 15 THE AI INVESTMENT LANDSCAPE 16 Global artificial intelligence equity funding: $6 BILLION across 1,098 DEALS 17 DEALS AND DOLLARS TO AI STARTUPS REACHED A NEW HIGH IN 2015 Equity financings to the AI space have gone from $282M in 2011 to $2.4B in 2015, a 746% increase in just 5 years. 18 DEALS TO THE SPACE ARE INCREASING FAST AI deals peaked in Q1'16 at 143, which translates to 36% growth quarter-over-quarter. Q4'14 and Q3'15, each saw huge tallies of more than $900M invested. 19 MAJORITY OF DEALS GO TO EARLY-STAGE STARTUPS Early stages saw the majority of deals over the past 5 years, though the figure is retreating slightly as the industry matures. In 2011, 70% of deals were seed or Series A, whereas now it's 65%. 20 MIDDLE-STAGE STARTUPS RECEIVED MOST FUNDING While AI deals skew toward the early stage, it's middle-stage deals (Series B and Series C) that have generally seen the most dollars invested. 21 KHOSLA VENTURES EMERGES AS MOST ACTIVE VC INVESTOR Venture capital firms have been actively investing AI startups. The rankings below are based on unique horizontal and vertical AI companies invested in from 2011 to 2016 year-to-date. 1 2 2 4 22 MOST ACTIVE VC INVESTORS The Business Social Graph helps visualize connections between startups and investors. Data Collective and Khosla Ventures share many portfolio companies including Vicarious and Timeful. 23 The Business Social Graph CORPORATE INTEREST IN ARTIFICIAL INTELLIGENCE STARTUPS RISING Corporate-backed deals and dollars reached a new high in 2015, with $926M invested across 88 deals. Some of the highest-funded rounds last year include a $117M Series E round raised by Taboola (backed by Advance Publications), a $60M Series D round raised by InsideSales.com (backed by Salesforce Ventures), and a $55M Series C round raised by Ayasdi (backed by Citi Ventures). 24 CORPORATE-BACKED DEALS REACHED NEW HIGH IN Q1'16 Q1'16 set a deals record for corporate-backed equity financing in artificial intelligence. Some of the highest funded rounds last quarter were raised by Digital Reasoning Systems (backed by NASDAQ, In-Q-Tel), and IBM Watson Group-backed Pathway Genomics. The funding high in Q1'15 was driven by the previous-mentioned rounds raised by Ayasdi, Taboola, and InsideSales.com. 25 MOST ACTIVE CORPORATE INVESTORS All top corporates investing in AI, unsurprisingly, are tech or data giants. Investment in the space likely offers strategic value to extract more from their data-driven core businesses. 26 Source: https://www.cbinsights.com/blog/most-active-corporate-investors-artificial-intelligence/ MOST ACTIVE CORPORATE INVESTORS Expect Labs saw investment from Intel, Google, and Samsung's venture arms. 27 The Business Social Graph WHAT AREAS ARE HOT? 28 THE MOST WELL-FUNDED CORE AI COMPANIES Company Total Funding ($M) $144M $98M $57M Description $76M AI platform that employs deep learning to a number of verticals. Uses machine learning algorithms to analyze risk in banks, and has also applied the technology to extract insights from healthcare datasets. Machine learning platform for data. Develops machine learning software for cognitive tasks that mimic the human brain. $67M Machine learning platform for predictive modeling. 29 HEATMAP OF DEAL SATURATION One of the top areas for deals has been Healthcare, Ads, BI, Cybersecurity, and Finance. 30 Source: https://www.cbinsights.com/blog/artificial-intelligence-investment-heatmap/ HEALTHCARE 31 "I don't think any physician today should be practicing without artificial intelligence assisting in their practice. It's just impossible (otherwise) to pick up on patterns, to pick up on trends, to really monitor care." -Bernard Tyson of Kaiser Permanente 32 "I don't think any physician today should be practicing without artificial intelligence assisting in their practice. It's just impossible (otherwise) to pick up on patterns, to pick up on re ds, to really monitor care." Bernard Tyson CEO, Kaiser Permanente Image Source: Fortune AI HEALTHCARE MARKET MAP 33 Source: https://www.cbinsights.com/blog/artificial-intelligence-startups-healthcare/ THE MOST WELL-FUNDED AI COMPANIES IN HEALTHCARE @cbinsights Company Total Funding ($M) $192M $154M $42M Description $141M Health management platform and social network to improve health outcomes. AI platform for facilitating research, treatment, preventative care, and nutrition. Applies AI to improve efficiency of pharmaceutical R&D process. High-performance ultrasound imaging that employs deep learning algorithms. $100M Analyzes clinical data and patient charts. #CBIAI 34 HEALTHCARE AI YEARLY DEALS AND DOLLARS Deals to healthcare-related AI companies have been increasing year-or-year since 2011, with deals more than doubling in 2014, and more tapered growth in activity in 2015. Funding jumped by nearly 460% in 2014, to $358M from $64M in 2013. This funding jump was driven by Butterfly Network's $100M Series C round and Stratified Medical's round of $64M. In comparison, the largest round in 2013 was for less than $20M. 35 Source: /https://www.cbinsights.com/blog/artificial-intelligence-healthcare-startups-funding-trends HEALTHCARE AI QUARTERLY DEALS AND DOLLARS Deals reached a new high of 30 in Q1'16, breaking the previous quarter's record of 21. Funding did not see a similar run-up, indicating that many of the deals in Q1'16 were for relatively small amounts. The funding peak in Q4'14 was driven by the previously-mentioned rounds to Butterfly Network and Stratified Medical. 36 Source: /https://www.cbinsights.com/blog/artificial-intelligence-healthcare-startups-funding-trends AI HEALTHCARE DEALS BY STAGE New startups are clearly venturing into this space, with more than 20 AI-based healthcare-focused companies raising seed/angel funds in 2015, compared to less than 5 in 2011. Overall, seed/angel deals dominated with a 46% share of deals during the last 5 years, followed by Series A deals at 23%. Some of the late-stage startups in this space include Pathway Genomics, WellTok, and Apixio. 37 Source: /https://www.cbinsights.com/blog/artificial-intelligence-healthcare-startups-funding-trends AI HEALTHCARE FUNDING BY STAGE Startups raising Series A rounds received the largest share of funding, 33%. The largest Series A round was raised by China's iCarbonX in Q2'16 ($154M), which is backed by Tencent and VCANBIO. Mid-stage startups raising Series B and C rounds accounted for 32% of total dollar funding to the space, though mid-stage deals constituted just 13% of the total deals to the space 38 Source: /https://www.cbinsights.com/blog/artificial-intelligence-healthcare-startups-funding-trends HEALTHCARE VS OVERALL AI DEALS As a percentage of total deals to startups using artificial intelligence tech, healthcare increased gradually from 11% in 2011 to 15% last year. 39 Source: https://www.cbinsights.com/blog/artificial-intelligence-healthcare-startups-funding-trends OTHER HOT AREAS 40 THE MOST WELL-FUNDED AI COMPANIES IN ADS, SALES, AND MARKETING Company Total Funding ($M) $199M $70M $58M Description $66M Predictive sales analytics platform. Predictive marketing and sales software. Cognitive content generation platform. Content marketing platform. $59M Marketing and communication automation for mobile. 41 THE MOST WELL-FUNDED AI COMPANIES IN B.I. Company Total Funding ($M) $128M $125M $75M Description $95M Customer insights NLP and sentiment analysis. Analyzes text for customer insights. Social media sentiment analysis tools. Big Data services for a variety of industries. $76M Big Data services for a variety of industries. 42 43 WHERE AI IS GOING HEATMAP OF DEAL SATURATION E-commerce and education are areas where deal volume has been relatively light. CRM and personal assistants have seen an increasing amount of activity. 44 AI EXITS: M&A ACTIVITY INCREASES 7X AI is on track to have a record year for exits, on top of a record-breaking 2015 that saw 2 IPOs among 38 overall exits. 45 Source: https://www.cbinsights.com/blog/artificial-intelligence-mergers-acquisitions-exits/ AI STARTUPS ARE SNAPPED UP EARLY Most AI companies are acquired within 4 years of their first financing. 46 Source: https://www.cbinsights.com/blog/artificial-intelligence-mergers-acquisitions-exits/ TIMELINE OF MAJOR ACQUISITIONS 47 *Exact date of Orbeus acquisition not disclosed Date Headline April 4, 2016 June 18, 2016 January 27, 2016 48 May 9, 2016 NOTABLE AI NEWS June 18, 2016 RECENT DEALS 49 RECENT ARTIFICIAL INTELLIGENCE DEALS Company Round Description $154M Series A, April 2016 AI-based healthcare analytics startup $100M Growth Equity, May 2016 Machine learning- based data analytics for businesses $27M Series B, April 2016 AI-based global trade solutions Data mining and machine learning solutions for IoT $26M Series B, May 2016 50 Applies AI to detect malware threats. $100M Series D, June 2016 QUESTIONS? @CBInsights #CBIAI Share your favorite insights and data points on Twitter 51 @NpappaG Web | www.cbinsights.com Twitter | @cbinsights Tel | 212.292.3148 52 </p>