Sector Snapshot Key Trends in Dealmaking Artificial Intelligence

Sector Snapshot: Key Trends in Dealmaking Artificial Intelligence | 3 Tech companies’ utilization of AI inmany core legacy products and services, such as Microsoft’s Copilot or Google’s Gemini A, has drivenmany companies’ surges in the past several months. Enterprise software remains the focal point for the untapped potential of AI agents, and this has been further evidenced by the ebbs and flows of enterprise software VC investment activity broken out by AI adjacency. In the previous hype cycles around AI’s potential, companies in enterprise software and AI garnered similar investment rates – for example, AI’s $18.0 billion in 2018 relative to $21.0 billion Market trends for enterprise software companies without AI involvement. Even amid a market downturn, 2023 saw the first near-equivalency, with enterprise software without AI at $22.9 billion and with AI at $22.1 billion. Althoughmultiple enterprise software companies are focused on building their own AI models, borrowing fromopen-source options, the flow of VC shows that AI is gradually proliferating across multiple aspects of enterprise software delivery, from back-end assembly optimization to automated customer service to product design to predictive maintenance for hardware. *As of 02/20/2024. Source: PitchBook. 2013 2018 2015 2020 2023 2014 2019 2016 2021 2024* 2017 2022 Enterprise Software Not AI Enterprise Software AND AI E-Commerce Not AI E-Commerce AND AI Artificial Intelligence & Machine Learning Enterprise Software Generative AI E-Commerce Enterprise increasingly adopts AI AI VC deal value ($B) by segment $140 $120 $100 $80 $60 $40 $20 $0