Building an AI Startup: Insights from Montreal’s Most Successful Founders
Founding an AI startup comes with not only the intimidating set of challenges faced by any entrepreneur, but also a variety of barriers specific to the emerging field. Already on the rise and fueled by the pandemic, the AI market is expected to grow 42% a year from 2020 to 2027. And with Montréal as a world leader in artificial intelligence research, the local AI startup scene is booming.
Over the past year through our series of Le Wagon Talks, we have spoken to eight CEO’s and major players of Montreal’s most successful AI startups to hear their advice about thriving in the AI industry. From data-specific concerns to advice for any entrepreneur, we have gathered the following tips and first-hand experience.
While large tech companies generally have access to more resources like client datasets (Facebook, Google, etc.), startups have agility, flexibility, and creativity — use this to your advantage when forming your data strategy.
Groundwork: data acquisition strategies
Because AI models perform better and better the more data they receive, gathering and curating data lay the foundation for an efficient, trained model. Options for securing data vary depending on a startup’s focus and business model, but it is critical to define a strategy before investing in a team and the initial expenses of creating the service or product.
Strategies include crowdsourcing, taking advantage of the Open Government Data Movement, launching a free app to collect data, forming partnerships, or creating artificial data. While large tech companies generally have access to more resources like client datasets (Facebook, Google, etc.), startups have agility, flexibility, and creativity — use this to your advantage when forming your data strategy.
Know your vision
Will your company provide a service or a product? Are you willing to prioritize intensive growth, knowing that certain investors will push you to do so? How much equity do you want to hold in your company? It is critical to define your structure, values, and mission as a startup early on. Our guests provided a few tips to help you create this foundation.
In terms of choosing between providing a product or service, Soodeh Farokhi, Founder & CTO at C2RO, puts it quite simply:
If you have something scalable, go with a product company, and if you have something valuable for a (profitable) niche market, go with a service company.
When seeking investment, you will face pressure from many different players and receive often contradictory feedback. While you must remain open to the opinions of trusted sources, having a pre-established idea of your values and business model as a startup will allow you to stay grounded during the process.
That being said, growing a successful business entails evolving and adapting: as Vincent-Charles Hodder, founder of Local Logic, discovered:
One of the benefits of being a founder is that as you develop, your company represents more than just your vision. It grows into something more powerful and profound.
Establish your vision but remain open to change and growth.
Hire the right talent
As Alexis Smirnov, co-founder and CTO of Dialogue puts it, “team, team team.” In the startup world, passion is not lacking, but having a capable team to transform this passion into a market-ready product is a significant challenge. Andy Mauro of Automat AI emphasizes this by recommending to constantly ask yourself this:
Why are you the team to solve the problem? You need to have credibility — investors are not investing in your product, they are investing in you.
While there is no simple way to assemble the best team, Alexis points out that it is about finding the most qualified people to delegate tasks to. The bigger your business grows, he says, the more you will work to hire the “superstars” — you must convince the best talent that your product or service will disrupt an industry and that your endeavour is worthwhile.
Recruit those who you know share a passion for your vision, and carefully choose both industry professionals and academics to ensure that your team can both create an effective AI model and bring it to market as a product or service.
Translate ‘tech talk’ to ‘business talk’
Tech companies, especially AI products or services, are complicated. The buzz around the field and the tech bubble in the public market is creating “AI washing,” compounding the difficulty for startups to find a place in an already saturated market.
“AI startups need to not only provide a stellar AI service or product, but also be able to explain the legitimacy and value of their creation to investors who may not have a background in the field.”
A recent study by London-based venture capital firm MMC found that 40% of AI startups in Europe do not use any AI in their businesses. Facing this kind of market, AI startups need to not only provide a stellar AI service or product, but also be able to explain the legitimacy and value of their creation to investors who may not have a background in the field. Vikrant Tomar, co-founder & CTO of Fluent.ai, describes it as “technical people think that the tech matters… yes you have to build great technology, but the VC’s and Angel Investors need to buy-in.”
It is critical that startups speak the language of technology and business. They need to translate between technical and commercial languages.
Emphasizing this issue in his article Secrets of Successful AI Startups, Simon Greenman, successful entrepreneur and member of the World Economic Forum Global AI Council, writes that “it is critical that startups speak the language of technology and business. They need to translate between technical and commercial languages.” The Harvard Business Review recently found that the startups most likely to succeed have technical founders who hire business people.
Create your product or service and then find those who can translate innovative tech into profitable business.
A product-ready market
We often hear about the need to create a market-ready product, but what about a product-ready market? With AI, this question raises significant concerns. As Vikrant T. confirms, the tech space moves fast, and founders must always race to stay ahead of the curve.
The fear that AI will take over jobs and the process of collecting human data to create and enhance models has generated great controversy.
However, sometimes tech moves a bit too fast. The fear that AI will take over jobs and the process of collecting human data to create and enhance models has generated great controversy. Such concerns have led to slow-moving policy development and a stigma around artificial intelligence.
To counter this issue, AI video analytics provider C2RO has prioritized stringent data protection in all of its technologies. As C2RO writes, “customers like to align their spending habits with their identity and values and will choose companies that treat privacy as a brand pillar.”
By understanding this barrier to the market and integrating a solution into the core of its product, C2RO thrived in the competitive AI industry. Founders must stay vigilant in monitoring the market and the viability of their product in this constantly developing field.
Is it worth it?
Alex Shee, Director of Industry Solutions and Corporate Development at Element AI, says this: “Every success story has behind it five, ten, fifteen years in the space and three or more years as a startup.” Even if you have the technology and the team to disrupt an industry, there is little guarantee of success.
If you do succeed, you make your vision a reality. Being an entrepreneur is about jumping in and taking risks to drive change through innovation.
But as Solon Angel, founder of MindBridge describes, if you do succeed, you make your vision a reality. You create jobs and wealth for your community, contributing to a movement much larger than yourself. And despite those who tell you not to do it, being an entrepreneur is about jumping in and taking risks to drive change through innovation.
Many thanks to our guests
Solon Angel, founder, MindBridge
Soodeh Farokhi, founder & CTO, C2RO
Alexis Smirnov, co-founder & CTO, Dialogue
Vikrant Tomar, co-founder & CTO, Fluent.ai
Andy Mauro, co-founder & CEO, Automat
Vincent-Charles Hodder, co-founder & CEO, Local Logic
Alex Shee, Head of Partnerships, Element AI
This blog post was first published on Le Wagon’s blog
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