There is no doubt that Artificial Intelligence (AI) is the way of the future. As more businesses are developing AI technology, both hard and soft, more organizations want a piece of the action.
Investing in AI startups, however, has some limitations, as standard business loans may not cover these acquisitions. You need to be aware of what can be achieved.
What’s for Sale?
Many tech startup companies are based on developing new AI technologies. These new inventions are designed to benefit existing industries, and these businesses exist so the big players can buy them.
This is big business. From 2015 to 2018, the number of AI startups in the US increased by 113%. These companies don’t go for cheap. Salesforce purchased AI business Tableau for $15.7 billion!
In the past 10 years, there have been 635 AI acquisitions, 145 of those last year alone. So who are the purchasers?
Who is Buying?
It comes as no surprise that the powerhouses in the tech field are the ones buying up these startups. Apple leads the charge, they have acquired 20, Google comes in second with 14, and Microsoft third with 10.
However, it’s not only tech companies who want AI in their business. McDonalds bought Dynamic Yield for $330 million, and Nike purchased both Celect and Invertex.
There is money to be made buying and selling AI startups, to date, 431 single entities have purchased 1 each.
How Can You Get In?
AI startups are for sale or looking for investors right now. You can get your fingers in the pie via business acquisition financing and small business loans. There are some conditions as this is still a new type of business.
The best type of finance you can get to purchase an AI startup is a business acquisition loan. In fact, the correct title is the SBA Business acquisition loan, also now as the SBA(7) loan. This is a government-backed loan provided by financial institutions. In recent news, this type of finance is available for investing in AI startups with a few conditions:
The business needs to be profitable and to have been established for at least 2-5 years. The good news is that most of the startups for sale have, on average, been operating for 3 years. Other factors considered by lenders are, it needs to be a small business by definition, a for-profit entity, and based in the United States.
To qualify, you also need to meet some criteria: firstly, you need to provide at least 10% as a down payment, have a credit score of at least 690, no current Federal debt and be bankruptcy free for the past three years.
With many big organizations buying up AI startups to boost their technology, now is the time to consider getting on board too. Purchasing one isn’t too tricky as financing is available via an SBA(7) loan.
AI is the way of the future, and an investment in these businesses now could greatly benefit you in the future.