SparkLabs raises $50m in funding to support AI startups

SparkLabs — an early-stage venture capital firm that has made a name for itself by backing OpenAI as well as several other AI startups such as Vectra, Allganize, Neron, Anthropic, XAI, Glade (YC S23) and Lucidya AI — is gearing up to double down on more startups in the region. The VC firm announced on Tuesday that it has closed a new $50 million fund, the AIM AI Fund, which will support AI startups from its own AIM-X accelerator in Saudi Arabia as well as other AI startups around the world.

SparkLabs’ new fund and its broad investment goals underscore the larger trends revolving around artificial intelligence over the past few years. An explosion of interest in generative AI, in particular, has led to a flood of startups in the field, as well as a rush of investors looking for the next open AI — or at least, a startup that a big company might buy as it looks to further improve its AI edge.

It also points to how AI opportunities are growing beyond Silicon Valley. AIM-X is an AI-focused startup accelerator launched by SparkLabs in the state earlier this year as part of its AI Mission, a national initiative to promote AI technology over the next five years.

There has been a significant increase in AI startups globally over the past few years. According to the Edge Delta report, by March 2024, more than 210 AI unicorns have emerged, valued at over $1 billion. Yet, despite being a global phenomenon, the US still leads in establishing the most AI startups, with 4,633 startups between 2013 and 2022, according to the report.

According to SparkLabs co-founder and CEO Bernard Moon, approximately 35% of SparkLabs’ new funds will support accelerator participants, with the remaining 65% aimed at making Series A and Series B investments beyond Saudi Arabia.

“The accelerator will seek a minority allocation for Saudi Arabian or MENA investments, around 10%-20%,” Moon said. “The vast majority will be just the best AI startups, regardless of location… I believe the vast majority will be in the US.”

Moon told TechCrunch that the average check size for accelerator participants will be $200,000, but it can go up to $500,000 under specific circumstances. Moon said Series A and Series B investments will range between $1 million and $5 million. The goal is to invest in a total of 50 to 70 companies from the fund.

SparkLabs did not name its limited partners, but Moon said its limited partners included government funds.

Its first batch will be announced live at the GAIN Summit (Global AI Summit) in Riyadh next Tuesday, September 10. Moon exclusively told TechCrunch that SparkLabs has already invested in 14 startups through the AI ​​Fund, which is the first batch:

• viACT: Hong Kong-based AI video analytics for workplace safety and construction management.
• IdeaLab: A New York-based startup that has created an AI solution to analyze body movements without using sensors
• Ahya: A Pakistan-based startup that has built AI-powered climate software for measurement, analysis, reporting, emissions reduction and transaction of carbon offsets.
• Swirl: A video platform in India that uses AI to help brands connect with customers on their websites and mobile apps through features like videos, user-generated content (UGC) reviews, video ads, and live shopping.
• Contents.com: An AI content creation platform in Italy
• Orco: Singapore’s AI-enabled EV fleet management platform
• Layla: An AI-powered travel startup in Germany
• Roughneck AI: San Francisco-based multimodal real-world data platform for deep learning applications
• Arctech Innovation: A startup spun out of the London School of Hygiene & Tropical Medicine that uses AI to create sensor-enabled products for detecting pests and diseases
• OptimHire: An AI-enabled recruiting platform in San Francisco
• Widebot AI: An Arabic Generative AI Platform in Riyadh
• Orbo AI: A Mumbai-based startup that has built an AI-powered tool to help beauty brands increase loyalty, engagement, and sales.
• Viril: An AI-powered video intelligence and marketing platform in San Francisco
• Stack Tech Farm: An agricultural technology startup specializing in vertical farming in Berlin.

SparkLabs has over 14 funds worldwide and two funds in Saudi Arabia. It has invested in over 550 startups worldwide.