AI Wave Shifts to Global South

For quite a while now, the big names in AI, like OpenAI and Google, have pretty much called the shots, with most of the investment money flowing into North America and Europe. It's been a very concentrated picture, really.

However, it looks like this dynamic might be shifting. A recent report, launched at the FII9 global investment conference in Riyadh, throws up some fascinating insights. It suggests that a whopping 87% of global investors are planning to ramp up their AI investments in the Global South over the next 12 to 24 months.

A New Era for AI Investment

This potential rebalancing act could be huge. Not only might it help level the playing field in global technology development, but it could also spark a whole new wave of AI innovation away from the usual centres of power. Imagine the fresh ideas and perspectives that could emerge.

So, what's got these global investors so excited about the Global South? It turns out there are several compelling reasons:

• Competitive talent base: Three-quarters of respondents highlighted the availability of skilled individuals.
• Affordable energy for compute: Around 70% pointed to more cost-effective energy, crucial for powering AI's demanding computational needs.
• Digital and physical infrastructure readiness: Nearly 69% noted the existing infrastructure, which is ready to support growth.
• Strong domestic demand: A healthy 67% mentioned robust local markets eager for AI solutions.

The report's findings come from a survey of 250 C-suite leaders from private equity, venture capital, and corporate venture capital firms worldwide. Significantly, 70% of these respondents already have dedicated teams focusing on the Global South, with another 26% planning to establish one soon. That's a clear indicator of serious intent.

We are excited to join FII in launching this insightful report, which provides a unique and timely opportunity for global business leaders to learn about the untapped potential of AI to unlock growth in the Global South," said Julie Sweet, chair and CEO of Accenture.

Bridging the AI Funding Gap

Despite the Global South being a hotbed of innovation, with over 23,000 AI startups founded since 2010, investment has historically been very lopsided. This disparity is quite stark. One of the main hurdles investors cited for not putting more money into the Global South was a perceived lack of proven business models and a significant talent gap.

Let's look at the numbers. Over the last three years, AI startups in the Global North received a staggering $108.3 billion in deal value. Compare that to the Global South, which saw only about $12 billion. That's a huge difference.

And it's not just about total funding. When it comes to 'unicorns' – companies valued over $1 billion – the imbalance is even more pronounced. The Global South, with its thousands of startups, has produced just eight unicorns. The Global North, on the other hand, boasts 305.

This situation is puzzling when you consider that the Global South is projected to contribute a quarter of global economic growth by 2030. Its AI ecosystems clearly have enormous, untapped potential that's severely underfunded right now.

Emerging AI Hotspots and Opportunities

So, where exactly is all this new interest heading? Investor attention is highest in:

• India (90%)
• Southeast Asia (44%)
• The Middle East (29%)
• Africa (21%)
• Latin America (17%)

Asia-Pacific is really spearheading the Global South's AI economy, with over 13,500 startups, a combined valuation of $16 billion, and an impressive $136 billion in foreign direct investment inflows. Within APAC, India is a major player, bolstered by its $1.2 billion IndiaAI Mission and securing a massive $2.4 billion in venture funding in just the first quarter of this year. For more on this, explore India's AI Future: New Ethics Boards.

In the Middle East, countries like Saudi Arabia and the UAE are making AI development a core focus, driving innovation with strategic government initiatives and significant investments. They're even developing AI solutions that are culturally attuned and language-specific, which is a clever approach.

Latin America is also fast becoming an AI hub. Governments there are using AI to tackle critical regional issues, such as the need for clean energy and advancements in financial technology.

Africa's AI landscape is on the rise too. With over 1,950 AI startups, it's seeing breakthroughs in financial and agricultural technology, cleverly using high mobile penetration to bypass traditional systems. This growth is part of a broader trend where AI is set to add nearly US$1 trillion to Southeast Asia's economy by 2030.

A particularly interesting investment opportunity lies in bridging the infrastructure gap. Most AI startups in the Global South are currently focused on application layers. This means there's a massive need for investment in fundamental technologies, things like data centres, cloud services, and compute infrastructure. It's about building the bedrock upon which all that application innovation can thrive. For a deeper dive into the challenges of data for AI, read about Running Out of Data: The Strange Problem Behind AI's Next Bottleneck.

The key takeaway for investors is clear: to truly unlock AI's potential in the Global South, they need to focus on specific regional opportunities, align with government initiatives, and help build trusted local ecosystems. This aligns with findings from the World Economic Forum on the future of AI in emerging economies.

We stand at an inflection point. AI is not merely a technological shift; it is the key to reinvention," explained Ramez Shehadi, managing director at Accenture. "But as our latest research reveals, a profound oversight threatens to leave many behind: the disproportionate focus on AI innovation in and for the Global North. Investing in the Global South is not only a strategic economic imperative but a chance to champion responsible AI from the ground up, ensuring inclusion, equity and sustainable growth are baked into the foundation of the next generation of industry leaders.

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