How AI startups can compete with tech giants

Tech giants are making acquisitions in the AI space, and an increasing number of startups are working with the technology.

But what’s key to succeeding in the AI space?

Speaking at The Europas, a European startup conference held in London today, John Henderson, principal at Whitestar Capital, spoke about the overwhelming competition in the space and noted the need for young tech firms to stand out from the crowd.

“When it comes to investing in AI startups what we look for and what is hard to find is defensibility,” he said.

DeepMind – acquired by Google in 2014 – Henderson argued was “a one-off”.

“It [DeepMind] was acquired for the research talent. Startups out there need to think about AI as an enabling technology or a platform, as opposed to every startup building their own AI technology,” added Henderson.

Azeem Azhar, chief of Exponential View, agreed, adding that AI startups were being acquired for their research talent as opposed to their in-house tech.

Competing with the giants

Azhar noted startups typically operate in niche markets, and doing so, gave them an element of competitiveness.

Having said this, however, Azhar added it was important for small tech firms to find a space where they could operate without competition from larger tech companies:

“Is it safe to compete with Google on web search? Probably not. You [startups] need to find another angle where you can operate [competitively].”

Anita Schjoll Brede, CEO & co-founder of Iris AI, spoke about what sets startups apart from big tech firms. “A startup’s specific mission is what gets everyone excited, that’s what is good about startups … we are building a community,” she added.

Mike Butcher, founder of The Europas, asked Henderson what he, as an investor, thought about startups using other firms’ AI APIs as opposed to building their own native technology.

Henderson said that, although this was a possibility, he did not believe companies going down this route would be classed as AI startups.

Given the intrinsic link between artificial intelligence and data, Azhar urged startups to obtain – and have access to – it, thus refraining from plugging into external APIs.

The future

Reflecting on what the AI space might look like in a decade’s time, Azhar said he believed there would be a couple of new incumbents, but tech giants like Apple, Google or Facebook would continue to operate in, and perhaps dominate, space.

In terms of where developments in AI stand today, Azhar was quick to note the need for machines to emulate human intention. “This is why chat bots are becoming increasingly popular … they build intimacy [with the customer],” he added.

Schjoll Brede concluded by saying success went beyond the technology itself, and that developing a product with a suitable market fit was key for a startups’ long-term survival.

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