- Artificial intelligence startups are attracting billions of dollars in outside investment, but the market could soon contract, according to UiPath's AI head, PD Singh.
- One sign of this is the recent layoffs at SoftBank-backed companies like robotic pizza-maker Zume, he told Business Insider.
- SoftBank invested $300 million in Automation Anywhere, one of UiPath's competitors in the buzzy robotic process automation industry.
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BELLEVUE, WASHINGTON— Artificial intelligence startups earned an eye-popping $26.6 billion in investments in 2019, a sign of how much excitement there is around the advanced tech.
But the funding could soon be drying up, or at least decreasing, according to PD Singh, head of AI products at UiPath. He cited layoffs at SoftBank-banked companies, like robotic pizza-maker Zume, as one sign that the investment environment is becoming tougher.
"If you look at that progression, I think the money supply is going to contract," he told Business Insider. "The companies that survive are the ones that have sustainable revenues. In the AI space… there aren't many who have sustainable revenues."
Singh says UiPath, which closed 2019 with $360 million in annual reoccurring revenue, would be safe in the event of a market contraction. And he has lofty goals to scale the AI business within UiPath.
"If we can get to a $1 billion revenue in AI attributable revenue, that would be good," said Singh.
To be sure, SoftBank invested $300 million in Automation Anywhere, one of UiPath's competitors in the red-hot robotic process automation industry. CEO Daniel Dines also turned down a $1 billion investment from SoftBank CEO Masayoshi Son, he told Forbes last year.
Both companies specialize in tech that allows companies to automate common, repetitive, and mundane computer tasks, like sorting job applications.
Despite the high-level of interest in the sector — the market is estimated to be valued at $10.7 billion by 2027 — some experts have questioned whether that hype will remain. And with tech giants like Microsoft rolling out their own RPA offerings, the firms competing in the space will face even more pressure to keep up with the behemoths.
UiPath itself had a bumpy 2019. After announcing a $568 million funding round— making it the world's most valuable AI startup at the time — the company laid off roughly 400 employees.
Singh didn't foresee any additional layoffs this year as UiPath prepares for an expected initial public offering. The timeline for the IPO could slip beyond early next year, according to CEO Daniel Dines.
"We just started our growth journey in 2016, and if you look at the average age of a company to do an IPO it's probably seven years," Dines told Bloomberg recently. "You have to become a public company at some point to allow your employees to get more liquidity, give them stock options. We're almost there."