Published on 25 March 2019


For investors, the artificial intelligence race has a long road ahead

Startups incorporating artificial intelligence technology are not as numerous as we think. A study conducted by MMC Ventures identified nearly 1,600 such startups in Europe. That’s 40% less than the number of companies claiming to be a part of this sector. Investors are ready to put more money into these promising technologies. It's up to them to separate the good from the bad.

France is the second largest European country for startups specialised in artificial intelligence, according to the MMC Ventures study.

This is a good argument for fundraising. According to a study by British venture capital firm MMC Ventures, European startups using artificial intelligence (AI) in their products, raise 20 to 50% more capital than young software companies that do not.

The reason is a classic case of supply and demand. Venture capital funds all seek to invest in artificial intelligence. Global investments have multiplied 15 times in the last five years. In addition, large companies have become involved. According to the study, 14% of European companies have already deployed AI-based solutions, and 23% plan to do so within the next 12 months. And it is with startups that they will draw on their developments.

Limited investment opportunities

Despite the increase in the number of startups in the sector, investment opportunities remain limited. Especially since not all startups claiming to have an AI component in their business model are legitimate. Of the 2,830 European startups analyzed that have already received investments, 40% do not actually have AI components in their technology!

MMC Ventures has a total of 1,580 startups, of which one exists at the heart of their value proposition as artificial intelligence technology. 479 of these startups are in the United Kingdom. This is twice the number of the other two leading countries, including France with 217 startups and Germany with 196.

Far from being anecdotal, the race for artificial intelligence is of crucial importance for future economies. "Over time, the distinction between AI companies and other software providers will fade and disappear as AI becomes more invasive," warns MMC Ventures.

An ethical risk to consider

Provided, however, that suppliers of artificial intelligence-based systems consider the ethical dimension of this technology. The study outlines several risks related to the adoption of AI: the loss of jobs, increased inequality due to biased algorithms, privacy breaches, lack of trust in the media or an increase in conflicts due to autonomous weapons.

The venture capital company makes several recommendations to avoid a rejection of these technologies. Specifically, it advises investors to assess entrepreneurs' understanding of ethical risks and their ability to mitigate these effects.

Arnaud Dumas @ADumas5

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