In Q2, VC investment in AI fell by 44%, while overall funding fell by 25%.

One of my few trusted news sites is Morning Brew newsletter and its companion Emerging Tech Brew.

Writer Hayden Field recently posted an article looking at venture investment in Artificial Intelligence. My inbox has swelled with AI this and AI that for some time now. Marketers evidently feel this is a magic word to drive sales while showing the world their company is cool with the latest tech. Of course, Artificial Intelligence (often called neither artificial or intelligent) has been around for decades. Much of the manufacturing software you’ve used for years has AI embedded. So, I’m not surprised at this.

Total VC deal count worldwide has maintained momentum from last year’s record highs, but so far in 2022, “deal value has declined rather significantly across all stages,” according to a PitchBook report—and AI funding in particular is falling faster than the market.

By the numbers:

In Q2 2022, global AI funding plummeted by more than 44% year over year, from $33.6 billion to $18.8 billion, per Pitchbook data shared with Emerging Tech Brew. Over the same period, overall global VC funding fell by 25%, from $176 billion to $131.7 billion. On a quarterly basis, global VC funding for AI and machine learning was down more than 26% between Q2 and Q1, a slightly larger margin than the 20% drop for global VC as a whole.

Same old tech story, how to turn hype to profits.

For years, many VCs believed AI companies would figure out the path to profitability down the road, Shahin Farshchi, a partner at Lux Capital, told us. Today, investors want to see founders give more thought to how, exactly, they’ll build a sustainable business model around AI.

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