FirstMark's 2021 MAD Landscape report is out. John and Matt from VC fund FirstMark do a great job synthesizing the current state of (or actually, convergence between) Machine Learning, AI, and Data. Let's dive in:

Recent technological advances have unlocked a "symbiotic relationship between data infrastructure on the one hand, and machine learning and AI on the other," mainly driven by data warehouses and data lakes. The former contains structured and filtered data (Snowflake, Amazon Redshift), and the latter saves unstructured raw data (Databricks.)

This new infrastructure allows for real-time data in analytics and operations processes, which enables intelligent and automated operations.

A positive flywheel is emerging, where every company has the potential to become a data company → increases supply and demand of data → increases the need for data and AI tools and platforms to make sense of data → more innovation from data and ML infrastructure companies.

As infrastructure companies scale, consolidate, compete, and build a suite of products and analytics tools, users like asset managers gain access to cutting-edge technology without hiring top data and ML engineering talent. Meanwhile, data-driven investment processes benefit from an increasing data supply that may unlock better insights and drive alpha.

It's no secret that investors regard these data and ML/AI companies as hot investments. For example, snowflake's IPO back in September 2020 was the biggest software IPO ever (currently valued at over $100B.) More recent IPOs include UiPath ($PATH, robotic and AI automation), Confluent ($CFLT, data infrastructure), and Couchbase ($BASE, no-SQL database.) (Disclosure: I am long $SNOW)

Even though some investors cry at their current sky-high valuations while bleeding cash, the authors claim that, as a group, data and ML/AI companies have outperformed the broader market.

On the private market's side, VCs have also happily poured billions of dollars into AI startups. Funds like Tiger Global, Coatue, Altimeter, Dragoneer, and D1 have identified this industry as a critical investing area.