Many founders of European AI startups “just want to make some quick money” and had no exposure to the space 18 months before the launch of ChatGPT, according to a European fintech founder’s withering assessment of the space.
Christian Frahm is the CEO and founder of United Fintech, a 2020-founded fintech which is looking to acquire and scale fintechs in the capital markets space.
Asked about potential United Fintech acquisitions in the AI space, Frahm said:
"We think the AI space is super fundamental to all our customers, super fundamental to our business, we take it extremely seriously.”
But he added a note of caution, saying many companies were jumping on the AI bandwagon to “make some quick money”.
He said:
“The space is difficult at the moment because whenever you have this amount of disruption in any space, you will see a lot of early adopters, you will see a lot of really skilled technical people building great businesses and great ideas.
“But you unfortunately also see lots of people that are not necessarily super visionary, that they just want to make some quick money.
“We struggle to find out who is developing core AI capabilities and who is leveraging large language models and putting some kind of interface on top of it.
“We are finding most of the space at the moment is not real money-saving or revenue-generating use cases, it is a lot of me-too.”
Frahm said the AI space was mirroring the rise of crypto, with companies jumping into this space with little credibility.
Frahm added:
“We look for a very small subset of people that are generally building long-term sustainable AI workflows around language models and not trying to dress it up as an AI company and that is in essence, unfortunately, most of the space we see today.
“We look at the background of people developing these companies, and most of the people that are now AI founders had nothing, no exposure to AI 18 months before ChatGPT launched.
"I think a simple way to look at is “where you involved in AI prior to ChatGPT launching publicly?' It is a pretty simple way to look at it. That’s how we look at it today.”
Generative AI burst into the public’s consciousness in 2022 when OpenAI launched ChatGPT. After just two months, ChatGPT had 100 million users,
United Fintech, headquartered in London, has so far acquired a handful of fintechs, employing over 160 people across 8 countries. Firms acquired include Cobalt, FairXchange, TTMZero, Athena Systems and NetDania.
Institutional investors in United Fintech include BNP Paribas, Danske Bank and Citi.
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