About two-fifths of all the self-styled AI startups in Europe do not actually leverage artificial intelligence (AI) in any vital aspect of their enterprise.
This information is based on a recent report that is said to have scrutinized 2,380 technology startups in the European Union.
The report dubbed The State of AI 2019 revealed that one out of 12 new startups in 2019 put artificial intelligence “at the heart of their value proposition.”
The number has increased from one in 50 startups back in 2013, with the United Kingdom “the powerhouse of European AI”, being home to one-third of all the AI startups in Europe.
Nonetheless, not all of the startups, are wholly involved in artificial intelligence, claimed the report.
“We individually reviewed the activities, focus and funding of 2,830 purported AI startups in the 13 EU countries most active in AI – Austria, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden and the UK,” the report explains.
“In approximately, 60 per cent of the cases – 1,580 companies – there was evidence of AI material to a company’s value proposition.”
The report conducted by MMC Ventures goes further to reveal that nearly 60% of artificial intelligence(AI) startup companies located in the European Union are still in their earliest funding stages, receiving funds from seed-stage financing or ‘angel investors’.
Only one out of six have managed to move from such an early stage to the growth stage, even though in the United Kingdom (along with Germany and France) companies are usually more developed.
Having the artificial intelligence (AI) label helps in attracting between 15 and 50 percent additional financing compared to the other technology-based startups.
Nonetheless, MMC’s Head of Research David Kelnar said that it is not necessarily the fault of the companies but mostly that of third-party data sites (like Pitchbook and Crunchbase) for misclassifying them as artificial intelligence (AI) instead of rectifying their mistake.
Similarly, there is slight incentive for startups to rectify the mis-classification, especially when it seems to help them in raising funds.
In his statement to Forbes, David Kelnar said: “We looked at every company, their materials, their product, the website, and product documents. In 40 per cent of cases we could find no mention of evidence of AI”.
“Companies that people assume and think are AI companies are probably not.”
Artificial intelligence entails the simulation of human intelligence processes by computer systems.
This field of computer science focuses on the development of intelligent machines that operate and react like human beings.
Some of the computers featuring artificial intelligence capabilities are designed to do various tasks including solving problems, planning, learning and speech recognition.
MMC Ventures is a research-focused venture capital entity that supports early-stage enterprises, particularly in the seeding stage and series A stage.
Established back in 2000 by Bruce Macfarlane and Alan Morgan, the firm has supported over 50 high-growth technology entities so far.
MMC, which has more than £220m under management, aims at scaling computer Internet entities with the power of disrupting huge markets.