SparkLabs Secures $50M Fund to Invest in Promising AI Startups

SparkLabs, a prominent early-stage venture capital firm recognized for its support of OpenAI and various innovative AI startups like Vectara, Allganize, Kneron, Anthropic, xAI, Glade (YC S23), and Lucidya AI, is poised to intensify its investment efforts in the AI sector. On Tuesday, the firm announced the closure of its newest fund, the AIM AI Fund, which totals $50 million. This fund will focus on AI startups emerging from its own AIM-X accelerator in Saudi Arabia, as well as other AI ventures worldwide.

The launch of SparkLabs' new fund aligns with the growing trends surrounding artificial intelligence that have captured attention in recent years. The rapid rise of generative AI has sparked a wave of startups, enticing investors eager to discover the next groundbreaking company akin to OpenAI—or, at the very least, a startup that larger corporations may acquire to enhance their own AI capabilities.

This initiative also highlights the expansion of AI opportunities beyond Silicon Valley. AIM-X, an AI-focused startup accelerator, was introduced earlier this year in Saudi Arabia as part of a national initiative called the AI Mission, aimed at advancing AI technology over the next five years.

Globally, the number of AI startups has surged significantly. As of March 2024, over 210 AI unicorns, each valued at more than $1 billion, have emerged, according to the Edge Delta report. Despite AI's global impact, the United States continues to lead in the number of AI startups, with 4,633 new companies founded between 2013 and 2022.

Approximately 35% of SparkLabs’ fresh fund will be dedicated to supporting accelerator participants, while the remaining 65% will focus on Series A and Series B investments outside Saudi Arabia, according to co-founder and partner Bernard Moon.

“The accelerator will target a minority allocation for investments in Saudi Arabia or the MENA region, aiming for around 10%-20%,” Moon stated. “The majority will be invested in top AI startups globally, with an expected concentration in the U.S.”

The average investment for accelerator participants is anticipated to be $200,000, potentially reaching $500,000 in exceptional cases, Moon elaborated. Series A and Series B investments will range from $1 million to $5 million, with plans to support between 50 and 70 companies through this fund.

While SparkLabs has not disclosed the identities of its limited partners, Moon indicated that they include a government fund of funds. The inaugural batch of startups will be unveiled live at the GAINS Summit (Global AI Summit) in Riyadh on September 10. Moon revealed that SparkLabs has already invested in 14 startups as part of this initial group, including:

- viAct: A Hong Kong-based AI video analytics platform for workplace safety and construction management.

- IdeasLab: A New York startup that provides AI solutions for analyzing body movements without sensors.

- Ahya: A Pakistan-based startup offering an AI-powered climate software for emissions measurement, analysis, reporting, and carbon offset transactions.

- Swirl: An Indian video platform utilizing AI to enhance brand connections with customers through videos, user-generated content (UGC) reviews, video ads, and live shopping.

- Contents.com: An AI content creation platform based in Italy.

- Orko: A Singaporean AI-enabled platform for electric vehicle fleet management.

- Layla: A Germany-based AI travel startup.

- Roughneck AI: A multimodal real-world data platform for deep learning applications based in San Francisco.

- Arctech Innovation: A spinoff from the London School of Hygiene & Tropical Medicine, developing AI-driven sensor-enabled products for pest and disease detection.

- OptimHire: An AI recruitment platform in San Francisco.

- WideBot AI: An Arabic generative AI platform in Riyadh.

- Orbo AI: A Mumbai-based startup with an AI tool to enhance loyalty, engagement, and sales for beauty brands.

- Vyrill: An AI-powered video intelligence and marketing platform, also based in San Francisco.

- Stack Tech Farm: A Berlin-based agritech startup focusing on vertical farming.

With over 14 funds globally and two specifically in Saudi Arabia, SparkLabs has invested in more than 550 startups worldwide, solidifying its position as a significant player in the venture capital space.