Artificial intelligence is the biggest buzzword that has grabbed the late tech world. But is over hyped the term Artificial Intelligence?Yes, that’s what the estimates of research show. According to research conducted by venture capital firm MMC Ventures, over two – fifths or 1,000 of the 2,380 AI startups in Europe are not using artificial intelligence in their products and offers. Surprised! We’re betting you are!!
A London-based investment firm MMC Ventures conducts the latest report highlighting the hype around technology. The study is based on public information and interviews with executives highlighting 40 percent of 2,830 AI startups in Europe analyzing artificial intelligence applications.
The report reviewed all new business functions, activities and funding across 13 European countries and found that many do not use AI in a productive way that adds to the value proposition of a company. In an interaction with Forbes, MMC Research Head David Kelnar said that “companies that people believe are AI companies are probably not.”
Experts think it might be the third – party analytics websites that mistakenly categorized companies deploying using AI, so good to be true. MMC’s Kelnar did not reveal which analytics sites or startups made these mistakes because it would send the wrong message to the venture capital firm’s potential investment.
Limited Deployment of AI
The study also found that many of the firms that use AI in connection with their business were dependent on pursuing use cases that had limited viability with 21% of firms pursuing fraud detection solutions and 26% developing chatbots.
The report raises concerns about the fact that artificial intelligence has become a blanket term with no significant meaning to define a myriad of technological innovations. Forbes pointed out that startups labeled as adopters of AI technology attract 15 to 50% more funding than those not. Startups and firms marked as AI firms have historically raised larger funding rounds and secured higher valuations than other software firms. This analysis can be ascertained by the fact that last year’s median funding round for an AI startup was about 15% higher than that for a software startup.
Despite the term’s appeal, the full potential of Artificial Intelligence is not being deployed. Companies use AI for mundane tasks to implement it. AI’s most popular use is for chatbots, followed by process automation tools that place administrative tasks such as claims for insurance and detection of fraud by algorithms rather than a person.
Leaders in AI
The UK has the most AI startups out of the 13 European countries examined. Interestingly, nearly 8% of European startups founded last year were AI startups compared to around 3% founded in 2015.
The report explains this trend because, compared to any country in the G20 international forum, the UK has the largest internet economy. Additionally, the superpower is facilitated by a large pool of academics from the top 25 universities in the world, supporting government policies, and a growing number of local AI companies like Deepmind (acquired by Google in 2014), MagicPony, and Swiftkey.
The Rise of AI and the Future
The AI hype is back in full swing with Deep Learning, Artificial Intelligence and Machine Learning all seen as promising and trendy research fields with huge potential for near – term growth and business – grade use cases.
The term artificial intelligence was applied to a variety of technologies ranging from simple computer programs that automate tasks to more complex neural networks and algorithms for machine learning. This widespread use of the term has made it difficult for venture capital investors to find a difference to invest in between actual and alleged AI companies.
With a word of caution, while the underlying technology in both areas is undeniably sound, some serious damage could be caused by the bad business practices cashing in on the AI hype.
In conclusion, a large minority of so – called AI firms may end up having a negative impact on the future fundraising potential of genuine, growth – focused firms in a world where reputation and good name are all in business. In the coming times, this retrogressive trend will have an effect on AI stock in general.