Big tech companies — such as Twitter, Facebook and Microsoft — have been splashing the cash on startups which have shown any ability in artificial intelligence.
According to a report by Magister Advisors, a global mergers and acquisitions advisory firm, AI companies are being bought for more than $2 million per employee.
Magister calculates that the “employee value is often far grater than business value”, adding that “a scramble is on” where tech giants are in competition to buy up the best teams.
Victor Basta, managing director at Magister Advisors, says: “A good AI engineer is worth more than many company CEOs right now.”
Twitter just paid $150 million for 14-person Magic Pony, a UK-based AI visual search company barely anyone had heard of before the deal.
At more than $10 million per employee, the acquisition marks “a high watermark” in AI for what is essentially a team acquisition, says Magister.
Magister has tracked 26 AI-driven deals since 2014 in the US, Europe and Israel, 11 of which involved companies with less than 50 employees which were acquired largely, or entirely, for the team and capability.
Across all 11 deals, the median price paid per employee has reached $2.4 million, meaning a high quality AI company with 40 employees would be valued at near $100 million — even if it had little or no revenue.