As artificial intelligence keeps getting better, more and more startup companies are now trying to incorporate this exciting technology in order to increase efficiency. Or at least, that seems to be what’s happening. According to a new report, however, a lot of AI startups across Europe are simply cashing in on the hype and don’t actually use artificial intelligence in any meaningful way as part of their business. This startling revelation comes courtesy of MMC, a UK-based venture capital firm that has recently released a new report on the state of AI in 2019.
According to the report, there are currently some 2,830 companies across Europe that are classified as AI startups. A pretty impressive number. Unfortunately, only around 1,580 of those companies (60%) actually make use of artificial intelligence. Meanwhile, the other 40% of so-called AI startups in Europe seem to have been wrongly labeled for various reasons.
“We looked at every company, their materials, their product, the website, and product documents,” says MMC head researcher David Kelnar. “In 40% of
Most of These Companies are Not Marketing Themselves as AI Startups
The report also found that a lot of the companies that are classified as AI startups haven’t actually labeled themselves as such. Rather, third-party analytics websites like Pitchbook and Crunchbase are the ones doing the classification and many of the companies that have been wrongly labeled simply didn’t bother to correct them. Kelnar believes most of these companies are well aware of the situation but aren’t doing anything about it because being seen as an AI startup has a number of advantages.
The MMC report indicates that companies working with artificial intelligence routinely raise anywhere between 15 and 50% more funding from investors compared to other tech startups. Therefore, it makes complete sense from a business perspective to just go with the flow when someone classifies your company as an AI startup. As
The Number of Genuine AI Startups is Constantly Growing
Misleading listings aside, MMC’s researchers also included some very interesting stats related to companies that actually do use artificial intelligence as part of their business. According to the report, the number of AI startups grew from 1 in 50 to 1 in 12 in just the last six years. The researchers also revealed that one year ago only about 4% of all major companies were using artificial intelligence technology in some form or another. That percentage is now already at a whopping 12% and constantly growing.