Given the prediction-making abilities of AI/ML and the decentralized nature of Web3, to understand the growing momentum and potential impact for a new arena of possibilities the two technologies afford, it’s important to look at the global investment patterns and adoption of each.
Global Investment in Artificial Intelligence
In 2023, the global AI market was valued at $150.2 billion and is expected to grow at a CAGR of 36.8% from 2023 to 2030. Conversely, the current Web3 market valuation is $2.86 billion in 2023, with an anticipated high of $116.51 billion by 2033.
It’s clear that the global AI industry is thriving. In 2021, AI global funding doubled to $66.8 billion, and a record 65 AI companies reached $1B+ valuations, up 442% from the previous year.
When we look only at the US, the AI market size accounted for $103.7 billion in 2022 and is estimated to reach around $594 billion by 2032, growing at a CAGR of 19.1% from 2023 to 2032.
Early-stage investors poured around $94 billion into Web3 companies between 2016 and 2022, most of it in the last two years, with investment peaking at $13 billion in the first quarter of 2022.
Venture Capital Interest and Investment in AI and Web3
Examining where VCs are putting their money also provides an indication of where the technologies are headed — or not. Let’s take a look at where and how VCs are investing in AI and Web3.
AI Start-up Investment
In the first half of 2023, AI startups raised $13.2 billion in VC funding. This is a 25% increase compared to the same period in 2022. According to the latest report by Tortoise Intelligence, worldwide investment in AI companies has increased by 115% since 2020, marking the most significant year-on-year growth in AI investment for at least two decades.
According to Crunchbase, venture capital firms invested over $25 billion in AI startups in the first half of 2023. While this is down from $30 billion in the first half of 2022, this is still a significant investment.
As for where this financial vote of confidence is going, the top three sectors for AI startup investment in the first half of 2023 were enterprise software, healthcare, and financial services. It will be interesting to see if this shifts at all in the new year.
Web3 Start-up Investment
It is important to note that the Web3 investment landscape is still relatively new and evolving. As Crunchbase reports, VC firms invested just over $3.6 billion in Web3 startups in the first half of 2023, down from $16 billion in the first half of 2022.
As the ecosystem matures, we expect more VC firms to invest in Web3 startups. In fact, some venture capital firms are still actively investing in the space. For example, Andreessen Horowitz (a16z) has invested in several Web3 startups in 2023.
These investments suggest that there is still some investor interest in Web3 startups, even though the overall investment environment has cooled. The top three sectors for Web3 startup investment in the first half of 2023 were decentralized finance (DeFi), non-fungible tokens (NFTs), and gaming.
Overall, venture capital investment in AI and Web3 startups is still strong in 2023 but has slowed compared to 2022. Investors are still interested in these technologies but are more cautious and selective in their investments.
Trends in AI and Web3 Adoption
The rapid integration of advanced technologies into business operations is evident in the increasing adoption rates of both AI and Web3.
AI Adoption
According to a recent report by Gartner, 40% of large enterprises are already using AI, which is expected to increase to 60% by 2024. They’re not alone. A growing number of small and medium-sized businesses are also using AI.
Web3 Adoption
As already stated, Web3 adoption is still in its early stages; however, there is growing interest in the technology. There are now over 30 million Web3 users worldwide, according to a recent report by Grayscale Investments.
Time for another disruption
The world of possibilities in AI and Web3 excites all of us here at Strategic Systems International (SSI). For the past three decades, we remain committed to delivering cutting-edge solutions that allow us to meet the ever-changing needs of our tech partners. It’s this focus that helps us maintain our position as a trusted advisor in the technology industry.
At SSI, it’s not a matter of any one technology over the other or even if specific technological advancements will continue at a certain pace. The real question is are we bringing disruptive, new business models and technologies to the market that drive our clients’ business forward? And the answer to that question, since SSI’s inception in 1991, remains a resounding “yes.”
