AI-focused listed startups aren’t getting the attention these days

Artificial intelligence is the hottest topic in the startup world.

But looking at the public markets, it’s clear that the focus on AI is not the secret to the stock market’s rally. This is evident in the recent performance of the most highly rated AI-driven companies that went public in the quarters leading up to the market peak.

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To illustrate, we used Crunchbase data to curate a sample set of venture-backed companies in this space that have been listed on US exchanges over the past three years. Open the list below to see all 11 companies we found.

It has a wide range of areas of focus, from business automation (UiPath) to legal discovery (Disco) to voice AI (SoundHound). What they all have in common, however, is that their current stock prices are well below those they were when they debuted on the market.

In the chart below, we compare the valuations at the time of IPO to the recent market caps of the nine companies on our list that are still publicly traded. (Berkshire Gray and Zymergen were acquired.)

The nine companies on our list have collectively lost nearly $50 billion in market capitalization since going public. This means he has decreased by 76.5% since his debut.

not totally discouraged

I’m depressed, but I’m not out. As disheartening as these declines sound, it’s worth emphasizing that most tech stocks are well below their 2021 highs. Also, the companies on our list went public at a time when the market was at its peak, so early valuations were booming by historical standards.

Moreover, today, all nine companies on our list are worth hundreds of millions of dollars or more. Some are multi-billion dollar companies. UiPath, for example, has a market capitalization of $8.4 billion. C3 AI, a provider of configurable enterprise AI software bearing the ticker his symbol “AI”, is a $3 billion company.

Some companies also make a lot of money. For example, UiPath has surpassed his $1 billion in sales in the past year, while C3 has reached hundreds of millions of dollars. But no, mind you, they are not profitable.

AI Hype Meets Market Downturn

So what does it mean that recent public companies are far from all-time highs despite the buzz in the AI space? AI overhyped in startup circles Is it being promoted? Is it not being advertised well on the open market?

who knows. In any case, it seems unwise to make the company sample set representative of AI’s potential. Also, I must confess, we did not scrutinize the quality of the companies’ AI technology in our sample. They may be depressed because they are progressing slower than expected or because they are lagging behind startups and older incumbents in technology and implementation. or maybe not.

Furthermore, while all the companies listed proudly and conspicuously tout on their websites that they are focusing on artificial intelligence, we cannot help but wonder how important this technology is to their business models. Didn’t evaluate how. Nor have we quantified what portion of their resources goes to AI.

Here’s what we know: For very mature startups and emerging public tech companies, these are tough times. Investors seem fed up with companies that have been around for years, have established business models and growing revenues, but are still losing money. It’s too late to convince them with just a story and a vision.