Code-Stripped: Many ‘AI Startups’ are Actually Naked
It’s not really a new insight when I tell you, it feels like AI is everywhere in the startup scene especially since 2023. But here’s a spicy take from our observations at Expedite Ventures: when you really look at their code and dig deeper, most of these ‘AI startups’ are, well, stark naked. Not all that glitters is AI gold.
AI Promises vs. Reality
Pitch decks are dazzling, promising AI marvels and tales of wonderlands. But when our team of CTOs at Expedite peeks under the hood, we often find the AI is more “artificial” than “intelligent.” When it comes to the moment of truth and we check the code, it’s often just a fancy facade for simple algorithms. It’s like expecting a Tesla but finding a remote controlled toy car instead.
Together with my fellow co-investor, Sebastian, a machine learning wizard for years, we’ve seen a lot in 2023: Take some recent pitches we examined, promising groundbreaking AI for data extraction. Spoiler alert: behind the AI mask was just basic coding without a whiff of AI insight. We’ve looked at code and models and yet, all we found was a straightforward hardcoded approach, without a hint of AI or ML.
We’re noticing a pattern: startups are in love with the AI label (sometimes rightly so when you look at the insane valuations paid for often lousy tech), and even when they incorporate some AI components, their data sets are often as thin as air. Even more often we’re just seeing a wrapper for the ChatGPT/OpenAI API. While there’s nothing wrong with that in a prototyping phase, it helps to point that out from the beginning. Also, we’ve noticed that the mindset of ‘just quickly using the API, we’ll change that later’ can hinder the accumulation of know-how in building, training, and operating customized models (which should be the goal if you’re an ‘AI Startup’, right?). Intriguingly, this approach often leads to a rapid burn rate — a hint: sometimes even unnecessary in the era of LLAMA.
While we definitely don’t claim to have all the answers or see every AI startup on the planet, the hundreds of pitches we reviewed in 2023 revealed a distinct pattern we can’t ignore.
In short: Big AI dreams, sure, but the tech isn’t walking the talk. If we had received a chocolate bar for every time we’ve seen a rules engine sold as AI, we would have had to skip Christmas this year.
A Call to Startups
Dear startups, let’s keep it real. If your AI is more of a future plan than a here-and-now reality: just say so. It’s cool to be a work in progress. Pretending otherwise? Not so much.
Investor Colleagues - look beyond the AI Sparkle
Fellow investors, don’t get lost in the AI fairy dust. Dive deep, ask hard questions. Look beyond the shiny surface of pitch decks brandishing the ‘AI’ label (means, about 95% of all pitch decks we get these days). At Expedite Ventures, we’re all about finding the genuine tech gems hidden in the AI noise. And we’re more than happy to lend a magnifying glass.
Final Thoughts
Innovation is more than a buzzword. It’s about bringing real, groundbreaking tech to the table. In the end, it’s about genuine innovation, not AI fantasies. We’re on a mission to find startups that truly push tech boundaries, not just play dress-up with buzzwords. Many AI startups lose their shine under a tech-savvy gaze. Remember, it’s not just about joining the AI parade; it’s about leading it with substance.
Let’s champion the real tech heroes — the ones who are honest about their journey and potential. Here’s to investing in solid ground, not just AI castles in the cloud.
P.S.: This isn’t just about critique; it’s about building a stronger, more genuine tech ecosystem. And hey, at Expedite Ventures, we’re always on the lookout for the real tech magicians. Got an honest, groundbreaking idea? We’re all ears!
