LONDON – Half of all European startups claiming to be AI companies do not actually deploy AI capabilities, prompting accusations that a number of startups are merely trying to capitalise on investor hype.
According to ‘The State of AI 2019‘, a MMC Ventures study, close to 40 percent of ‘AI startups’ across 13 EU countries show little evidence that AI adds any value to their business. Out of 2830 startups analysed, only 1580 – 60 percent – were deemed to genuinely be putting AI and related technologies at the heart of their business plans.
The report claims that, as far back as 2015, startups claiming to develop AI have consistently raised more capital than software firms. One in six European AI companies is now at the growth stage and has managed to secure a minimum of $8 million in funding.
The findings will no doubt prompt unease among VCs and other investors – and pressurise startups to start delivering AI products with real value for businesses.
Other key findings from the report include:
- With nearly 500 AI startups, the UK is ‘the powerhouse’ of European AI, possessing a third of Europe’s total and twice as many as any other country
- Europe is home to almost 1600 early stage AI companies, with one in 12 startups placing it ‘at the heart of their value proposition’
- Nine in ten AI startups address a business function or vertical, with just one in ten providing a ‘horizontal’ AI technology
- AI entrepreneurs’ key challenges are the availability of talent, access to training data, and the difficulty of creating production-ready technology