VC funding is down, but one NYU endeavor is on the rise

Following global trends, New York saw a significant decline in the number of venture capital deals executed in this year's second quarter. According to New York Business Journal, only 178 projects received VC funding between April and June - the lowest quarterly tally since Q4 of 2011. The news isn't necessarily negative, however. While the number of deals is down, the average deal valuation - $23.9 million - is up nearly 20 percent from a year ago.

One beneficiary of the investments is NYU. Specifically, the university's Tandon School of Engineering received funding to establish an incubator program in artificial intelligence (AI). The program's aim is to recruit five fledgling AI startups to campus, and connect them to both academic and financial resources. Crain's New York Business reports that NYU will own a 2 percent stake in each firm it brings in, while the VC firm backing the endeavor will own a 6 percent stake in each firm.

Artificial intelligence has received very little funding - until now

Until recently, VC firms have largely overlooked AI, though funding is steadily increasing. In 2010, AI companies received $45 million in funding; in 2015, they received $310 million. Projections estimate that the AI industry will generate more than $20 billion over the next decade.

The uptick in funding likely results from a newfound ability to envision AI's tangible benefits. AI companies are focused on developing technologies that provide practical help to the working sector. AI is near the point where it can perform a number of tasks effectively and efficiently, such as troubleshooting computer systems, translating texts from one language to another, calculating insurance rates on an individualized basis, and a range of other services one might typically associate with a company's help desk.

Using AI to bolster New York's economy

NYU is keen to set itself up as a leader in the field. Startups selected for its program will have access to three supercomputers owned by the university, as well as to faculty who are established experts in the field.

While the companies are required to focus their efforts on sectors integral to New York's economy - finance, healthcare, and media chief among them - there are no expectations with regard to deliverables.

"The field is very open," said the Dean of the Tandon School. "We'll see how far we go with this."

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