Home Startups Forty percent of European 'AI startups' don't use AI, claims study

Forty percent of European ‘AI startups’ don’t use AI, claims study

Posted on

- Advertisement -

Artificial intelligence or AI is one of the most misused terms in tech today, and new research shows how hyped this technological term has become.

Based on a new report from London-based venture capital firm MMC Ventures, 40 percent of Europe’s artificial intelligence start-ups, don’t actually use AI programs in their products. And the study took into account about 2,830 AI start-ups across 13 EU countries by reviewing the activities, focus and funding of each firm to come to this conclusion. However, it did not name any of the start-ups involved in the study.

The findings raise questions about how the term AI has become a blanket phrase for many start-ups looking to attract better investments and position themselves at the forefront of tech innovation.

As noted by Forbes, the ‘AI Startup’ classification may not have come from these companies themselves. Third-party analytical sites are often responsible for the classification, and it’s not clear from the MMC’s report what percent of ‘fake AI startups’ were misleading their customers.

But the report also shows that there are clear incentives for startups not to speak up if they’re misclassified. Companies branded as AI startups have historically raised larger funding rounds and secured higher valuations as compared to other software businesses. MMC found that they can attract between 15 and 50 percent more funding.

The term “artificial intelligence” is used in a variety of technologies, from simple computer programs that automate tasks to highly complex neural networks, which are systems for processing data, and machine learning algorithms. The widespread misuse of the term has made it difficult for venture capital investors to differentiate between actual and purported AI businesses.

The report also found that when companies deploy AI, its use-case is quite linear and boring. Most of the companies surveyed used AI included chatbots (26 percent of companies) and fraud detection (21 percent). However, in both scenarios, it’s tricky to decide exactly how much this technology benefits customers.

“Getting stuck in buzzwords is never a good thing. AI has become a catch-all phrase that’s often used flippantly,”

Simon Cook, Chief Executive of Draper Esprit

Felicia Calle
Felicia Calle
Australia | Felicia's fascination with tech began in the 90s, and she loves to update readers on the best tech deals on the internet. When she’s not writing, you’ll find her travelling around the world.


Event Management Software Showdown: Cvent vs. Eventbrite vs. GEVME

As an event organizer, there is a need to be good at juggling multiple tasks under the pressure of time, while ensuring that the...

 Submit a Story

Do you have a story to share? We will help you inspire, connect, and celebrate with our thoughtfully vibrant community. Click here to find out more!

 Latest Stories

In brief: Artist illustrates how superheroes will look when they retire

Eddie Liu, an artist, based in Shanghai, has created a short yet beautiful series that imagines how a few of our...

Singapore’s BandLab Technologies to acquire British music publications NME and Uncut

Singapore's music tech company, BandLab Technologies, has announced its acquisition of NME and Uncut from London-based TI Media. This is a...

Google I/O features Singapore startup, BandLab

Amidst the excitement arising from the announcement at Google I/O conference last week, Singapore startup, BandLab, was featured in two of...

Philippine conglomerate JG Summit to invest US$50M in Southeast Asian startups

In its bid to grow the startup ecosystem in the region, JG Summit Holdings Inc, one of the largest listed conglomerates...

How to write better headlines [Infographic]

Writing good content is one thing, but it’s another to get that content read and ranked on search. As a content...