Fortune Business Insights puts AI’s compound annual growth (CAGR) at more than 33% between 2019 and 2027, reaching a market value of nearly $267 billion.
Meanwhile, IDC values the current market higher but the five-year CAGR lower (at 17.5%), and sees it possibly reaching $500 billion from 2024.
Whichever figure you look at AI’s growth potential looks strong in the wake of post-Covid digital trends, the rising number of connected devices and expanding cloud-based applications in diverse areas from manufacturing, health and retail to banking, cyber-security, and the investment world (see ‘AI can help impact investors’).
Private investors may find this encouraging, but markets for emerging tech are often won and lost on where and how governments weigh into them.
Proposed new EU regulations for AI are a talisman here (see our feature ‘Past the hype: helping investors weigh up their AI position’).
Growth in AI may still very much depend on public support – standard-setting, co-financing, public-private partnerships (PPP) – to reach its full potential in Europe.
States are keen to capitalise on the innovation dividend that AI and similar emerging technologies can deliver but stress that such developments must safeguard people’s wellbeing and rights, as well as the functioning of markets and the public sector.
The EU’s big bet on green and digital technology as part of its Green Deal priorities (2021-2024) is a case in point. But the bloc’s investment in a ‘digital future’ started much earlier.
A dedicated programme for frontier research, called Future and Emerging Technologies (FET), has been around for decades and the recently concluded Horizon 2020 funding programme directly targeted advances in big data, AI and other novel digital technology.
This priority is scheduled to carry on under its Horizon Europe (2021-2027) programme.
Strong demand for co-investments
In 2019, the Commission launched a €50 million call to set up excellence centres aimed at boosting cooperation and advances within Europe’s AI research community.
It has also invested some €20 million in the AI4EU platform to share and promote resources, datasets, services and expertise coming out of AI-related projects. Readers can sign up to the platform, which is currently in beta testing.
Meanwhile, at the international Web Summit last December, the European Investment Bank (EIB) announced, together with the European Investment Fund (EIF), the opening of a €150 million co-finance facility to spur AI investment in Europe.
“Artificial intelligence is a key component in a technological revolution that we are already witnessing,” noted EIF’s Chief Executive Alain Godard at the time of the launch, adding that there is strong market demand for co-investments in this sector.
“The EIB’s expertise in assessing individual equity-type investments and the EIF’s market reach and ability to leverage strongly on the fund managers in our portfolio active in the AI domain will ensure that the facility is deployed efficiently.”
Working together with private investors the EIB has earmarked support for some 20-30 SMEs. The focus on early and growth-stage companies is deliberate, to help them bridge the funding gap in Europe for pioneering AI applications.
“By assisting fund managers investing individual tickets of over €1million in high-growth European companies the new instrument will complement the EIF’s existing fund activities,” noted the EIB in a launch statement.
Do no harm
Participants in state-backed projects and activities are typically assessed on a ‘do no harm’ basis and financial viability is closely examined during public procurement and contracting processes. Therein lies a potentially deep pool of pre-vetted ‘impact investment’ prospects.
What’s more, companies taking part in PPPs typically show an openness to sharing and contributing to state-backed ventures and activities directed at the common good.
One such partnership (AI-PPP) is being set up to boost “value-driven trustworthy AI, data and robotics based on European fundamental rights, principles and values”. It brings together various initiatives (EurAI, CLAIRE, ELLIS, BVDV and euRobotics) covering aspects of artificial intelligence, big data and intelligent systems in different settings.
The positive news for small businesses and their investors is that this partnership wants to make sure SMEs and start-ups are included in all its activities.