Forty percent of so-called AI startups in Europe don’t actually use AI programs in their products, the Financial Times reported March 4.
British investment firm MMC Ventures analyzed 2,830 European AI startups, according to the Times, using public information and interviews with executives to build profiles of each company. But of those nearly 3,000 startups, which were focused mainly on health, finance and media, just 40 percent appeared to use any AI applications in their work.
According to MMC Ventures’ research, nearly 8 percent of European startups founded last year were AI companies, compared to 3 percent in 2015. Companies branded with the term “AI” also tended to raise more funding than traditional software businesses—the study found the mean funding round for an AI startup was 15 percent higher than funding for a software start-up.
“There are different levels of sophistication when it comes to building these algorithms and many hype up the claims of what they’re actually building,” said Ophelia Brown, a partner at London-based venture capital firm Blossom Capital. “It’s the responsibility of the investor to do due diligence on the company...but a lot of firms are not able to do it.”
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