Global investment into Artificial Intelligence (AI) more than doubled in the last year, reaching record highs as the world emerges from the initial onset of the Covid-19 pandemic, data from Tortoise Intelligence has found.
The Tortoise Global AI Index, released today in its fourth iteration, measures national AI preparedness across more than 120 indicators. Its findings reveal that total AI investment reached $77.5 billion in 2021. The previous record, set last year, was $36 billion.
Our findings reveal that the US has benefited most from this investment drive. US-based companies pulled in two-thirds of total global venture funding in AI in 2021 – or $51 billion worth of investment.
The amount of funding flowing to each country is one of over 120 data points that Tortoise tracks in its ranking of 62 countries on their capacity for AI development.
The Tortoise Global AI Index ranks nations by AI preparedness. It analyses metrics including investment into AI, the strength of a nations’ talent pool, the quality of its research, supercomputing capabilities, and the level of ambition and muscle behind national government strategies.
The results of today’s Index update finds the US has retained its position as the number one AI nation, followed by China in second and the UK in third. The top three spots remain unchanged since last iteration – and indeed since the Index was first launched. The granularity of the data, however, allows us to see which country is really leading the way – and why.
A sudden, urgent need for digital collaborative spaces and remote working tools during the pandemic forced business leaders to understand the vital need for digitisation, says Michael Chui, partner at the McKinsey Global Institute. This includes AI and automation.
It should come as no surprise, then, that investment in AI is growing at an exponential rate.
AI funding this year has been buoyed by a number of large investments into autonomous driving tech, with companies working on everything from robotaxis to modular chassis for autonomous cars receiving some of the biggest AI-related funding rounds of 2021. Globally, 31 per cent of all AI funding went into companies in the transport sector, but China is a clear leader in this area, with just over half of its funding going into transport tech.
Health-related AI also attracted a sizable share of global funding – at 10 per cent of the total – as a global medical crisis drove investors to seek AI-driven solutions for healthcare problems, from tools that help diagnose illnesses to AI-driven apps that connect doctors and patients. The UK far outstrips China and US in this area – drawing in 20 per cent of its funding for healthcare startups.
Fintech-focused companies also pulled in a substantial share, representing six per cent of all funding, while Privacy and Security companies made up four per cent.
Narrowing the gap between the US and China
The US remains the undisputed leader of the Index, with an overall score almost double that of China, its closest competitor. More than anything else, the US stands out for its unparalleled ability to attract large sums of investment, with San Francisco a major hotspot for funding.
The biggest US funding round to an AI-focused company in 2021 went to DataBricks, a San-Francisco-based cloud data platform, which received $1.6bn investment. Self-driving electric car companies Cruise and Lucid Motors, both of which are based in San Francisco, also landed standout investment rounds.
China also saw an increase in funding to AI companies, albeit a smaller one than that seen in the US. In total, Chinese companies working on AI have pulled in just under $9 billion so far in 2021, up 20 per cent on last year. One of the biggest funding rounds in China went to HT Aero, a company developing autonomous flying vehicles. Another went to Momenta, a self-driving car company.
While the US dominates the global stage on investment flows, China has excelled in other areas. Overall, it is gradually catching up with the US in terms of the strength of its AI ecosystem.
As the top country, the US automatically earns full marks – 100 out of 100 – so its score remains unchanged since the last update. China’s score went up to 62.9 this iteration, up from 58.2 in our last update in June.
China’s research prowess is growing, in part due to a rapid increase in papers accepted to the IEEE – a body which sets AI standards and also publishes a number of influential AI journals. Between June 2020 and November 2021, China was responsible for a 64 per cent increase in the number of accepted papers, while US-based papers only increased by 28 per cent.
China’s growing talent pool is also strong, showing up on measures of AI coding activity. For example, China scores first in the world on the number of users “liking” AI code on Github, a platform for sharing and publishing code, indicating that there is a large number of Chinese coders engaging and innovating in AI implementation. China also ranks in fourth place for the number code uploads – known as “commits” – to projects relating to AI.
Israel moves up to fifth position
This update sees Israel claim fifth place on the Index, displacing South Korea, largely thanks to its ever-growing commercial capacity.
Israel beats all other countries when it comes to AI funding per capita, with $325,000 in funding invested in AI-focused companies for every million people. It also comes first in the world for the share of GDP going to R&D. Israel has always performed well on these metrics, but its performance has only strengthened further over the course of the pandemic.
Major funding rounds this year for Israel include $235m to AnyVision, a facial recognition startup, and $317m to REE Automotive, a manufacturer of modular platforms to support autonomous vehicles.
Israel also scores highly on metrics relating to its ability to cultivate a good environment for homegrown AI talent. For example, it has 19 higher education institutions now offering students AI courses, and a favourable visa programme for high-tech experts.
The UK holds on to third place… just
The UK’s story this year is one of big strengths and weaknesses. Its bronze medal position was obtained as a result of its superb home-grown researchers, a strong AI start-up scene and a history of innovation and computing. However, the UK also suffers from a low level of patent filings and weaker operating environment than other Index leaders.
Commercially, the UK has expanded slightly over the past year, with $2.5bn in funding flowing into UK-based AI businesses in 2021, up 3 per cent on last year. Canada, which currently sits at fourth place in the Index, and is snapping at the heels of the UK, pulled in $1.7bn.
UK coding activity has also seen a boost, with package downloads of both Python and R – which are tracked as a proxy measure for development taking place in the artificial intelligence space – growing by almost four per cent.
While the UK did drop a single place in the rankings for the number of universities offering training in artificial intelligence, the University of Manchester recently became a partner of the European Laboratory for Learning and Intelligent Systems (ELLIS), joining a world-class network of institutions that will carry the pace of development in cutting-edge applications across health, security and sustainability.
At the grass-roots level, Meetups focusing on artificial intelligence development have become more popular in the UK, possibly as a result of digitisation and the impact of lock-down. Attendance at these events has increased by ten per cent over the course of the past year, alongside the publication of business articles focused on artificial intelligence, which has also grown by nearly the same amount.
Despite fears of a Brexit brain drain, the UK’s talent pool is also increasing; the combined number of data engineers and data scientists in the sector is up by 17 per cent since last year. The UK’s growth in these areas, measured through social media data, does outstrip its closest follower – Canada – which has grown by 12 per cent year on year.
The UK still has areas of weakness in its development and operating environment, despite maintaining its third place position. Patent filing for innovation in artificial intelligence, for instance, has tailed off from UK inventors, with the number of such patents being granted down by 11 per cent since the last update. Additionally, the UK’s current visa regime for skilled workers suffers from a very high cost due to their £624 per year healthcare surcharge, deterring potential AI talent from entering its borders.
As the UK embarks on its National AI Strategy, however, it may have the potential to mitigate these weaknesses and even improve on its current strengths. With recommendations to create new visa routes for AI innovators, invest in a UKRI National AI Research and Innovation Programme, and bolster homegrown talent through AI scholarships and new curricula, the UK’s ambition to improve its standing is clear.
Europe bounces back
While our report earlier this year found Europe falling behind in our Index, a jump in funding and talent metrics signals that European nations may be climbing their way back up.
When it comes to funding flows, France leads the way with $1.6 billion in funding so far this year, with Germany following behind with $1.2 billion. Together, the 22 EU nations represented in our Index have reached a record total of $4.4 billion in 2021, more than doubling their value since 2020. This growth is slower than the US, but faster than that in China.
Europe is also gaining ground on talent, with 12 out of the top 20 countries for AI talent now located in Europe, up from nine in our last update. This has been driven by a sizable jump in the number of people in key AI-related roles appearing on LinkedIn across Europe.
Spain, for instance, has moved up four spots in Talent ranking, after its total pool of data scientists grew by 14 per cent over the course of just six months. AI has also been capturing the attention of Spanish politicians, with the country’s secretary of state for AI recently calling on the EU to accelerate progress on regulation.
New spikes in talent can also be seen in the Baltic states, with Lithuania and Estonia increasing their LinkedIn talent pool by 36 per cent and 24 per cent respectively.
Who are the ones to watch?
Since our last update, eight additional countries have officially released government strategies on AI: Slovenia, Turkey, Ireland, Egypt, Malaysia, Brazil, Vietnam, and Chile. From in-depth public consultations on Malaysia’s AI Roadmap to the establishment of an AI monitoring and tracking system in Egypt, each of these countries hit the mark on almost all our evaluative strategy indicators, and many have moved up substantially in our Index as a result. Slovenia, for instance, increased by 11 ranks this year.
A key element missing from some of these strategies, however, is public spending figures. Out of the eight countries that have released strategies this year, only Slovenia, Ireland, Brazil, and Chile have publicly dedicated money towards AI development. Slovenia has earmarked the most, with an announcement of $131 million over the next four years to implement its strategy. Following behind is Ireland with $65 million, Chile with $33 million, and Brazil with $13 million, allocated to AI research projects and hubs including the ADAPT Centre in Ireland and the AI Innovation Network in Brazil.
It’s clear from our findings that it’s AI boom time. After a slowdown in 2020, the amount of funding into AI looks like it is back to a trajectory of exponential growth. Government strategies in artificial intelligence are becoming more common, too. The question for the countries in our Index is who will keep up with the pace of AI.
Additional reporting by Patricia Clarke, Luke Gbedemah, Alex Inch and Michele Pascale