The world of AI is full of hype. According to the widely referenced MMC report, 40% of European companies classified as being “AI startups” showed no evidence that they actually used AI.
“I don’t think that really surprised anyone. It largely stems from startups wanting to position themselves as an AI company for the premium they receive when fundraising, hiring, selling or otherwise and, I think, a lack of understanding,” comments Harry Davies, Applied AI Lead at Tech Nation. But, this practice negatively impacts AI-first startups. It generates noise and, ultimately, disillusion among investors and beyond.
As a starter-guide to cutting through the hype, Davies recommends asking these five questions. More broadly, he believes in the power of supportive networks and in initiatives that build high-relevance ones for startups. At a time when a number of nations are jockeying for position on the AI stage, support networks for homegrown startups become even more meaningful. That’s what motivated him to join and lead Tech Nation’s latest nationwide growth programme, for which applications open today.
Supported by the U.K. Government’s Office for Artificial Intelligence – as part of the AI and Data Sector Deal – Applied AI 1.0 is targeting AI-first startups that aim to solve real-world problems. To keep the programme relevant for its participants, the focus will be on helping B2B startups, that primarily develop and sell solutions to other businesses. In fact, this category covers 90% of AI companies.
Applicants for the six-month programme will be selected by a judging panel made up of leading AI experts – including David Kelnar, Partner and Head of Research at the above-mentioned MMC – with up to 20 successful entries starting the free programme in September. Among alumni of other Tech Nation programmes one can spot TransferWise, Deliveroo, Tessian, Farfetch and Monzo, just to name a few.
“Investment in AI technology has grown almost six-fold in the last four years, and many AI unicorns are headquartered in the U.K., including Darktrace and Graphcore,” comments Gerard Grech, CEO at Tech Nation.“This significant growth means that the need for access to industry knowledge, connections and insights has never been greater, which is why we’re delighted to announce this latest scaling programme for Applied AI companies.”
Arguably, the U.K. doesn’t suffer from a lack of programmes offering support to startups.
“Yet, we created this programme because we saw that, despite being spread across sectors, AI-first companies have unique challenges when scaling. The pool of companies post-series A is still relatively small, despite the hype, and there seemed to be a gap of support post-seed,” explains Davies.
Evolving an AI startup from algorithms in the lab into meaningful recurring revenue presents inherent challenges that span from data and talent acquisition to long product development cycles and complex funding requirements.
These key challenges – identified through conversations with founders and VCs – will inform the sessions put forward by the Applied AI 1.0 programme. The goal is to empower startups by creating an environment for meaningful interactions, facilitated by later-stage founders and peer-to-peer learning across the C-suite.
“We believe that the best advice on scaling companies comes from those who have done it before. And the best support comes from like-minded peers who are going through the same experiences,” says Davies. The programme will also host a series of curated dinners and networking events – attended by industry experts, journalists, government and investors – and look to include an international trip.
Having such a platform to share experiences and get inspired should, at least in theory, make the journey into growth rounds that little less arduous.
Communities are at the core of any healthy startup ecosystem. It’s encouraging to see Tech Nation’s ongoing efforts and the virtuous cycles they trigger. For example, Applied AI 1.0 will be supported by Faculty, an AI company that has previously benefited from Upscale, another Tech Nation programme.
“We’re excited to have the opportunity to give something back to the community,” shares Angie Ma, Faculty’s COO & Co-Founder. “Having delivered over 300 commercial AI projects, we’ve developed a deep understanding of how to apply and operationalise AI successfully across many different sectors of the economy. We’d love to share these learnings as part of the Applied AI Programme to help the next generation of startups to make AI real.”
A number of other alumni and companies from current Tech Nation programmes, including Peak.ai, Skyscanner, Darktrace and Onfido, have stepped forward to judge or run sessions.
Facilitating access to a practical supportive network is also a claimed VC value-add, portfolio days being just one example. Given the increasing overlap in scope, the dynamic between acceleration programmes and VC value-add is bound to change.
“As VCs increasingly move towards more structured post-investment support to differentiate themselves, I think the line will blur between acceleration programmes and VC value-add,” agrees Davies. Compared to the typical VC, “programmes tend to have massive portfolios, so a role for them to play here is to curate around a particular stage or space in a neutral fashion, such that it engenders a highly targeted, curated network with maximum relevance and trust.”
There is a risk that, despite best intentions, too many acceleration programmes will start competing for attention, making it difficult for startups to select the most relevant one for them. So, where to start in cutting through that noise?
“There are really three main variables when considering an acceleration programme; cost, time, and return,” summarizes Davies. “The first is easier. The second is tougher; founders are super busy people and a programme only makes sense if the return to the business actually exceeds the time committed. This can be hard to measure and it’s not always immediately transactional. ‘Return’, then, needs to be as tangible as possible for founders to make this calculation. Usually, this falls into (a) demonstrably exceptional people delivering sessions (b) a strong, relevant peer group and (c) tangible connections that move the business forward.”
