One in 12 of Europe’s new startups work in AI sector

One in every 12 newly founded companies in Europe calls itself an AI company, with the field dominated by UK startups, a new study reveals.

But two-fifths of the 2,830 startups show little evidence of AI, the report released today from venture capital firm MMC Ventures and Barclays shows.

Artificial intelligence, technology which allows software perform difficult tasks commonly associated with humans by learning through training instead of following sets of rules, has grown rapidly in European business.

The UK is Europe’s major player in AI with nearly 500 AI startups, a third of Europe’s total and twice as many as any other country.

Read more: London startup numbers rise in face of Brexit uncertainty

Only one in 50 new ventures were AI companies in 2013, but now one in seven large companies has adopted the advanced technology. This growth is set to continue – within 24 months, two thirds of large companies will have live AI initiatives, the report predicts.

Health and wellbeing dominates the AI sector, with more startups focusing on this than on any other area.

Britain is at the heart of European healthcare AI, with a third of the continent’s startups. This is in large part due to many of the world's top-rated universities for medicine and teaching hospitals being based in the UK, and the increasing openness to innovation of the NHS, the report says.

Traditionally, the sector has been dominated by business-to-business companies, those who develop and sell solutions to other companies.

Nine in 10 of Europe’s 1,600 current AI startups have a business-to-business model. However, in 2018 a quarter of new AI startups sold directly to consumers.

Artificial intelligence may bring drawbacks, however, the report warns. The automation of routine jobs may increase unemployment, with social and political consequences. 

Read more: KFC taps London fintech startup Flux for paperless payments

“AI offers profound benefits, from improved healthcare to more accessible transportation, but presents risks that must be managed responsibly”, said David Kelnar, partner and head of research at MMC Ventures.

Steven Roberts, managing director of Barclays UK Ventures, added: “We’ve seen the impact on our everyday lives, from facial recognition to the recommendations we’re served up."

He said AI must "solve a real-life problem for people, businesses and society, and to do so in a responsible and inclusive way".