Forty per cent of AI start-ups in Europe aren't involved in AI

clock • 3 min read

Out of 2,830 AI start-ups only 1,580 genuinely are, claims new report

Forty per cent of all new supposedly artificial intelligence start-ups in Europe don't actually use AI in any key part of their business.

That's according to a new report that claims to have examined 2,830 technology start-up companies in the European Union.

According to the report, The State of AI 2019 [PDF], one in 12 new start-ups put AI "at the heart of their value proposition" in 2019, up from just one in 50 in 2013, with the UK "the powerhouse of European AI", accounting for one-third of Europe's AI-related start-ups.

Companies that people assume and think are AI companies are probably not

However, not all of them, on closer examination, are fully engaged in AI, the report suggests.

"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. 

It continues: "Together, these countries also comprise nearly 90 per cent of EU GDP.

"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, by MMC Ventures, goes on to add that around 60 per cent of AI start-ups in the EU are nevertheless at their earliest stages of funding, receiving investments from ‘angel investors' or seed-stage funding.

Just one-in-six have moved on from this early stage to the growth phase, although in the UK (along with France and Germany) companies are typically further developed.

The AI label magically attracts between 15 per cent and 50 per cent more funding compared to other technology start-ups

The reason why so many start-up companies either claim to be involved in AI or are relaxed about others claiming that they are is quite simple: the AI label magically attracts between 15 per cent and 50 per cent more funding compared to other technology start-ups.

However, according to David Kelnar, head of research for MMC, it is not necessarily entirely down to the companies, but often third-party data websites (such as Crunchbase and Pitchbook) mis-classifying them as AI, and not correcting their mistake. Likewise, there's little incentive for a start-up to correct the mis-classification when it can make funding easier to raise.

Talking to Forbes, 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".

He added: "Companies that people assume and think are AI companies are probably not."

The AI and Machine Learning Awards are coming! In July this year, Computing will be recognising the best work in AI and machine learning across the UK. Do you have research or a project that you think deserves wider recognition? Enter the awards today - entry is free. 

You may also like
Which jobs are at risk from AI in 2024? What new roles will be created? IT leaders tell us

Careers and Skills

Good news for data scientists, less so for admin

clock 19 February 2024 • 3 min read
Microsoft's chief security advisor joins Cybersecurity Festival 2024

Security

Sarah Armstrong-Smith will talk AI in security

clock 19 February 2024 • 1 min read
Sora: OpenAI unveils text-to-video AI tool

Big Data and Analytics

Access is currently limited to researchers and content curators

clock 19 February 2024 • 3 min read

Sign up to our newsletter

The best news, stories, features and photos from the day in one perfectly formed email.

More on Big Data and Analytics

'Insurers are the original big data companies,' says AXA UK data chief Paul Hollands

'Insurers are the original big data companies,' says AXA UK data chief Paul Hollands

GenAI has created a step change in data perception

Penny Horwood
clock 12 February 2024 • 7 min read
Gemini Advanced: Google launches subscription-based AI chatbot and app

Gemini Advanced: Google launches subscription-based AI chatbot and app

Priced at $19.99 per month, Gemini Advanced gives users access to Google's most powerful AI model to date

clock 09 February 2024 • 2 min read
The impact of UK data protection on data analytics and AI

The impact of UK data protection on data analytics and AI

Beverley Flynn and Jessica Gregson
clock 05 February 2024 • 4 min read