Almost half of European startups which tout the latest-and-greatest artificial intelligence (AI) technologies lack the substance behind their claims, a new report has found.
Hardly a day goes by when we do not hear of the latest developments in AI, machine learning (ML), and associated technologies. While many of these projects are, indeed, impressive -- such as MIT's development of brains on-a-chip, CSIRO's use of AI to find disease-related genes, Berkeley's ML experiments in continuous learning, or Intel's smart city network-in-a-box project -- there are a number of startups which are trying to jump on the success of true AI research for their own ends.
According to a new study (.PDF) published by MMC Ventures in partnership with UK bank Barclays which examines the state of the AI field in 2019, many early-stage companies are claiming the use or development of AI but without any evidence of these kinds of technologies materially impacting their businesses in any way.
After examining 13 EU countries with local startups claiming to be active in AI -- including in the UK, Denmark, France, Germany, Italy, and Spain -- in close to 40 percent of cases, there was little evidence of AI adding any value.
One in twelve new EU startups now claims to be an AI-focused company. However, out of 2,830 startups examined this year, only 1,580 organizations -- roughly 60 percent -- were truly attempting to put AI and related technologies at the heart of their business plans.
While basic AI has existed for the past 50 years, it is only in the last few that the development of these technologies has spurred on exponential growth and interest in the industry.
One in six European AI companies is at the growth stage and has managed to secure a minimum of $8 million in funding, and should AI be promoted as the core of a new project, such a startup is expected to secure more in funding than your average software-driven company.
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MMC Ventures says that since 2015, startups claiming to develop AI have constantly raised more capital through investment rounds than software firms -- a premise that brings to mind use of the word "blockchain" by a number of companies to make their shares jump in 2018, despite having no interest in distributed ledger technologies.
However, it must be noted that it is not always the startup itself which is at fault. As the line between software and AI development blurs, third-parties may also assign startups the AI label incorrectly.
AI adoption has tripled in the past 12 months. One in seven enterprises have now adopted some form of AI in their business, and according to Gartner, 23 percent of enterprise players intend to deploy AI initiatives in the coming year.
As long as interest in AI technologies continues, the funding will flow. It is, however, up to investors to make sure there is actually business value in a startup which claims to be the developers of the next big thing in artificial intelligence.