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Softbank backed startup raises funding by making fake AI promises


The new hype in the world of technology is Artificial Intelligence (AI). Ideally, we have seen organizations piggyback on a trending topic to catch more eyeballs; which is more of a branding stunt; but using such hype to raise capital is another story in itself.

Moreover, it can be misleading or sold to you by someone looking to cash in on the hype around it. As per the Wall Street report, “Venture firms nearly doubled their funding of AI startups to $31 billion last year from 2017”. Artificial Intelligence (AI) is one such thing that startups are increasingly abusing to get funding and new users.

One such case that is under the limelight is “Engineer.ai.” Sachin Dev Duggal and Saurabh Dhoot founded the startup in 2012 as SD 2 Labs, and then startup was rebranded as Engineer.ai and later launched in June 2018. (As cited on Entrackr)

In the same year, Engineer.ai raised $29.5 million almost double to the money they got as an investment in 2017. Their investor’s list got some big names, such as Softbank-owned Deepcore, Zurich-based VC Lakestar, Airbnb, and Singapore-based Jungle Ventures.

Engineer.ai is an Artificial Intelligent backed service that allows users to build an application that is as easy as ordering a Pizza (As per their spokesperson); which is one such service that has been alleged to exaggerate its AI capabilities.

Mr. Sachin Duggal, “the chief wizard,” of the organization claims that their human-assisted AI bot called Natasha assembles the code for the development of the applications. However, they are relying on human engineers in most of the cases.

One of their many spokesperson claims, they use natural language processing to estimate price and timeline. It further states that it assigns tasks through a decision tree to engineers. Both the work, as mentioned, does not even qualify for modern AI capabilities.

The Wall Street Report claims to have talked with former employees of the organization, who also said that the organization is hyping its AI capabilities.

According to Robert Holdheim, former CBO of Engineer.ai, the company is exaggerating its AI abilities to get the funding. Sachin Dev Duggal (Engineer.ai CEO) was telling investors that Engineer.ai was 80% done with developing a product that; in truth, they have barely even begun to develop, as per Holdheim, who also sued the company in the same year.

Engineer.ai might not be a single case in isolation. Lately, the startups’ ecosystem has witnessed a phenomenal rise in AI-based startups. In reality, 70 to 80% of startups using AI in their pitch to escalate chances of getting financed.

Though mobile-app development startup Engineer.ai finally broke their silence over the allegations of exaggerating its AI capabilities. Mr. Sachin Duggal, CEO, and Co-founder of the company released a detailed document to clear the air. He has denied allegations of the Wall Street Journal. He said,  the company never claimed to have “automated software development,” they’ve always preferred the term “human-assisted AI.” The company has laid stress on being transparent to customers, investors, and anyone they’ve interacted with.

He further explained the business model of human-assisted is designed to remove any repetitive tasks from the ‘build, run & scale’ journey; Platform matching work is an essential part of the process. AI and other technologies are a core of the work, but talent, capacity partners, have an equally vital role to play. “The company will always be a human-assisted AI company as this partnership provides unique solutions that the customer needs,” it adds.

Artificial Intelligence is also a bit complex and loosely defined; this makes it very difficult for nonexperts to determine. As per a survey of London Venture Capital Firm, MMC Survey found out that 40% out of 2830 startups in Europe do not use AI. However, funding is still flowing in the sector. Development highlights a growing challenge in the world of technology — the ever-changing landscape of new technologies. Where would it lead to? As happens most of the time after being duped, one becomes more susceptible and cautious.

Humans are required to improve the AI, even when companies are reluctant to admit it and not always transparent with customers when someone is involved in the process. In this case, a whole class of new startups appears to use AI hype to try to build new technologies; that they may not be able to provide — or even intend to do so — both because it may be too difficult and because it is easy to pretend otherwise. And as a result, these firms get more money for it.

Cloud Evangelist
Cloud Evangelist
Cloud Evangelists are CMI's in house ambassadors for the entire Cloud ecosystem. They are responsible for propagating the doctrine of cloud computing and help community members make informed decisions.


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