Where can you find New Zealand’s pure play AI startups?
Generative AI may be the talk of the tech sector but our startup community hasn’t jumped on the bandwagon yet.
Contributor
Peter Griffin
Will Leonardo Ai be the next Canva? That’s the big question across the Tasman after the Australian Financial Review revealed the Blackbird Ventures-backed AI-powered image generation platform brought in A$1.6 million from customers in its first five months offering subscriptions for its software.
The generative AI era kicked off just a year ago with the debut of OpenAI’s ChatGPT and has spawned hundreds of startups and billions collectively invested in them with a few giant bets dominating a subdued startup investment landscape. Microsoft’s US$10 billion investment in OpenAI early in the year remains the biggest single deal, followed by Amazon’s US$4 billion commitment to OpenAI rival Anthropic, and Inflection AI’s US$1.3 billion funding round led by Microsoft and Nvidia.
It’s a similar scene in China, where the Eastern equivalent of Silicon Valley’s Big Tech giants are making sizeable investments in large language models and generative AI platforms. Beijing-based 01.AI achieved a US$1 billion valuation just eight months after launching its
foundational large language model, Yi-34B, with Alibaba’s cloud division its key investor.
But our local startup community and their angel and venture capital backers haven’t gone big on generative AI yet, though pure play AI startups may be building their offerings in stealth mode.
The spring Startup Investment update from PwC noted that of the $71.6 million of early stage funding for New Zealand startups in the first half of 2023, deeptech and SaaS accounted for the majority of investment dollars. However, AI was identified as a trending sector alongside gaming.
A feature or a company?
AI experts Caffeine spoke to struggled to name early-stage pure-play AI startups that have attracted funding. Our tech companies are no strangers to artificial intelligence in general, but tend to employ it to enhance their core offering rather than focussing on it specifically.
With generative AI evolving so quickly – OpenAI made a flurry of announcements last week at its inaugural Dev Day – that may not be a bad strategy. Leonardo Ai is Australia’s shining star in AI, but faces stiff competition from Midjourney, Stable Diffusion, and OpenAI’s DALL-E.
Tim Warren, the co-founder and former CEO of Ambit AI, which integrates conversational AI into customer service channels, says Kiwi startup founders exploring AI need to create something that isn’t likely to become just another feature of a ChatGPT premium subscription.
“Steve Jobs made the point many years ago, are you a company, or are you a feature? A lot of things pop up in AI, but the business model could disappear overnight.”
Warren hired three AI and machine learning engineers with PhD qualifications at Ambit, but says finding the right AI talent remains a challenge. So too does attracting interest from local investors who have traditionally been lukewarm on AI.
“Just before ChatGPT came out, a potential investor said to me we should take the AI out of the company name. They said AI is so uncool. The world has changed very quickly,” he says.
He compares generative AI to the early days of enterprise SaaS offerings, which initially confused investors, at least until Xero started to demonstrate what the cloud could do for the software business model.
Warren was an early investor in Fuel50, which has built AI personalisation and matching tools into its talent marketplace platform, which is now used to recruit and upskill tech workers all over the world.
It’s a similar approach taken by agritech company Halter, which raised $85 million in series C funding in March.
“Halter never set out to be an AI company,” Warren points out. “But they've used AI to solve some of the core business problems, such as how to help farmers reduce cost and digitise some of the process of managing cow herds.”
AI from the ground up
Justin Flitter, a tech marketing expert and founder of New Zealand.ai, says the sweet spot for Kiwi startups to date when it comes to AI has typically been in the solutions space, incorporating services from big-name vendors. He points to the likes of Aware Group, ElementX and Rush Digital.
Flitter also reaches for an Apple anecdote to describe the flurry of generative AI applications that could soon be rendered obsolete.
“When the iPhone came out, there was an app for the flashlight and then all of a sudden the flashlight became a built-in feature, so no one needed an app anymore,” he says.
“OpenAI is literally just watching how everyone uses it and what everyone else is doing to build on top using the API. And then they're just doing the same thing.”
Salesforce, Microsoft and Hubspot have been “hammering AI into their platforms” to reduce technical complexity and mine business data for insights, appealing to customers’ desire for the privacy and security associated with big-name vendors.
“Ultimately, I don't see that as the way of the future. We're going to see AI-first companies arise which are entirely built using generative AI from the ground up. That’s what we are seeing with the likes of Leonardo Ai,” he says.
His advice to Kiwi startup founders is to build their understanding of how generative AI promises to change how we work – that’s where the business opportunities will lie in the next few years.
Warren says it's a prime opportunity for young, wannabe entrepreneurs to experiment with the technology as previous generations of tech luminaries did in their early years.
“There's a lot of people sitting around at universities in the dorms with big startup ideas. No matter what they are studying, it's about getting them actively on the tools and doing things.”
Six AI startups to watch
This startup is using GPT and other language models to bring together and manage disparate sets of data from across a company. Says Justin Flitter: “Microsoft Copilot certainly integrates with the Microsoft environment, but where Smartspace is coming in is with the ability to integrate disparate data sets that you might not be able to connect up otherwise.” Smartspace was founded by LawVu’s Tauranga-based co-founder Tim Boyne.
A division of Wellington software company EndGame, Hoist was founded by Andrew Butel with the aim of allowing businesses to easily create and maintain AI prompts to streamline workflows. Hoist says its AI-powered tools enable work product and content generation in professional service businesses, and are “specifically designed for companies in New Zealand and Australia”.
Founded by Matt Ensor within engineering firm Beca in Auckland, FranklyAI was initially conceived to streamline public consultation for civil engineering projects by offering an intelligent chatbot to gather feedback. FrankyAI scored a coup when it was made available within the Microsoft Teams platform, which is widely used for collaboration and messaging across enterprise businesses.
The Wellington startup founded by Asa Cox deploys AI assistants to automate workflows and back-office functions with the aim of improving productivity across an organisation. It has a close partnership with AWS, and Greenbutton founder Scott Houston serves as Arcanum’s chief technology officer.
Based in Singapore and founded by New Zealand fintech entrepreneur Dr Hamish Macalister, Transparently employs AI in its Transparently Manipulation Risk Analyzer to spot manipulation of financial accounts. Transparently launched its AI-powered forensic accounting service in September 2022. Macalister recently told RNZ that its study of listed companies worldwide found that New Zealand had the eighth-least level of accounts manipulation.
Founded in 2018 by University of Auckland researchers under the umbrella of the Medtech Centre of Research Excellence, Toku Eyes uses AI software to analyse scans of the back of patients' eyes. It's the ideal place to get a detailed view of a person's veins, with changing colours and shapes helping indicate whether a person has a heightened chance of developing type 2 diabetes, stroke, and cardiovascular disease. Toku Eyes just received Breakthrough Device fast-track approval from the US Food and Drug Administration, which clears the way for Toku Eyes' CLAiR system (Cardiovascular Risk AI) to be used in a clinical setting in the US. Toku Eyes co-founder Dr Ehsan Vaghefi says the technology allows for cheaper and more convenient retina scans as they can be completed by a patient's optometrist, rather than needing a referral to a medical specialist.
Other AI-heavy Kiwi startups that should be on your radar: Volpara Health, Soul Machines, Futureverse, HeartLab, Ambit AI.
Contributor
Peter Griffin is a Wellington-based technology and science writer, media trainer, and content specialist working with a wide range of media outlets and tech companies. He co-hosts The Business of Tech podcast for BusinessDesk and is the New Zealand Listener's tech columnist. He has a particular interest in cybersecurity, Web3, biotech, climate tech, and innovation. He founded the Science Media Centre and the Sciblogs platform in 2008.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Aenean faucibus nibh et justo cursus id rutrum lorem imperdiet. Nunc ut sem vitae risus tristique posuere.