It sometimes seems like every new startup leverages the power of AI technologies to transform their industry and change the world. According to the State of AI 2019 report there are about 1600 AI startups in Europe, about 1 in 12 startups put AI in their value proposition. About 16% of AI startups are in their ‘growth’ stage, meaning they have raised over $8 million in capital. Overall AI startups secure higher valuations and raise more capital than equivalent non-AI startups.
This same report also mentions that they reviewed 2830 self-reported AI startups and only 60% appeared to include AI in it’s value proposition. In 2013, only 50 new startups embraced AI technologies. So why are there so many more AI companies today? Do they actually believe in the power of AI, or is it just a technique to benefit from the hype and secure more funding?
One reason for this could be the confusion about the definition of artificial intelligence. Artificial Intelligence generally refers to the simulation of human intelligence, often related to machines simulating cognitive functions like learning or problem solving. But there is no single definition of Artificial Intelligence. There are many different fields in artificial intelligence ranging from machine learning, to image recognition and Natural Language processing. Artificial Intelligence often requires large amounts of data and often has a close relationship with other areas in statistics and data science. This broad definition could cause startups that don’t really use Artificial Intelligence as part of their value proposition to refer to themselves as AI startups, even when they are working on complex data problems using more traditional techniques in statistics and data science.
A second, more malicious, reason could be related to the hype AI receives. Artificial Intelligence has a prominent role in science fiction and there are many news articles of AI beating humans at games and tasks alike. This has created a hype around Artificial Intelligence and startups might try to benefit from this. Hoping it translates into more attention or funding, benefitting the company through deception.
Sources:
MMC Ventures (2019) The State of AI 2019: Divergence.
https://www.investopedia.com/terms/a/artificial-intelligence-ai.asp
https://www.edureka.co/blog/top-15-hot-artificial-intelligence-technologies/
https://analyticsindiamag.com/how-to-declutter-the-ai-hype-in-startups/
