A series of news articles based on a report from venture capital fund MMC Ventures and Barclays made headlines revealing that 40% of “AI” startups in Europe do not have any evidence of using technologies associated with the term.
Here’s the relevant section of the report: “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 United Kingdom. Together, these countries also comprise nearly 90% of EU GDP. In approximately 60% of the cases – 1,580 companies – there was evidence of AI material to a company’s value proposition.”
Moreover, the report did not accuse companies of anything, rather called attention to the assignment of these labels by widely used industry tools that track private, early-stage companies.
David Kelnar, partner and head of research at MMC Ventures told FTCM: “We are not implying that companies are misrepresenting themselves. The issue is a pragmatic one. Typically, companies are being assigned labels by others. Incorrect labels that go unchallenged feed into inaccurate analysis and understanding.”
Kelnar said that the biggest takeaway from MMC’s research is a positive one – that one in 12 European startups is now an AI company, versus one in 50 five years ago: “We’ve entered the age of the AI entrepreneur. Entrepreneurs are leading the charge towards our AI future, and are a leading indicator of a future in which AI is ubiquitous. The degree of interest in a classification point, instead, perhaps reflects a bit of fatigue around the concept of AI following extensive attention upon it.”
Of course it’s important to remember that hype can be a discrediting force, and we hear much understandable moaning about it from across the financial industry. The problem is that this kind of shrewd media angle, which surely generated a lot of clicks and self-satisfied sneers from cynics, adds to an anti-hype-hype that is truly tedious, and probably counterproductive.
Last week, Fintech Capital Markets attended a series of events, many of which discussed venture capital funding of fintech and other types of start-ups. Here’s what we think you should know about the cynicism-optimism rollercoaster on this topic.