Google and Toyota Both Launch AI Venture Capital Funds

Google parent Alphabet launched Gradient Ventures earlier this week. The fund promises more than cash for startups. It is positioned as also providing access to Google resources for portfolio companies.

Our AI-focused venture fund invests in and connects startups with Google’s resources, innovation, and technical leadership in artificial intelligence.

The fund already has four investments: Algorithmia, Aurima, CAPE and Cogniac. AI has been the big focus for Google since 2016 and dominated the presentations at the annual I/O developer conference. So, this announcement is noteworthy but not out of the ordinary.

Toyota Joins the Tech Giants

Toyota’s $100 million AI fund was unexpected. Toyota AI Ventures will “operate as a subsidiary of the Toyota Research Institute,” according to TechCrunch. It currently has three portfolio investments: Slamcore, Nauto and Intuition Robotics. The first two are related to automotive technologies. The third is the maker of a smart speaker robot for the elderly called Elli-Q. Toyota certainly makes consumer products, but its expertise doesn’t necessarily translate into consumer electronics.

The Google move is both strategic and closely related to its core business. Toyota’s fund may be strategic, but it is well outside its core business. This could be a leading indicator that AI is getting overhyped and there will be too much money chasing too few deals–or more likely that this is already true. However, you can also see this as evidence that many people recognize AI is driving the next big technology platform shift and they don’t want to be left behind.

For Toyota to invest in AI startups isn’t unprecedented in automotive. Ford announced earlier this year that it is investing $1 billion in self-driving AI. GM Ventures, BMW i Ventures, Volvo Venture Capital Group and many others have developed investment arms targeting technology. Maybe the move by Toyota into AI VC isn’t a bad idea. It could be that the mistake is investing too little.

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