For their class in Biomedical Engineering Design, Daniel Aragón, Yoku Sashida, and Alan Fridman created a prototype of a glove that tells the wearer the electrical state of someone’s heart just by touching his or her chest. Artificial intelligence (AI) was key to this innovation from 2016.
After presenting the ECGlove to their class at the Guadalajara Campus of Tec de Monterrey, the students were invited to an entrepreneurship workshop, attended the Tec Lean Accelerator and Tec Lean Launch acceleration and incubation programs, added two more partners (Josué Godínez and Snaider Bautista), and created the Soluciones Kenko startup.
The company was set up to develop medical devices. It has areas for marketing, software and hardware development, and industrial design, as well as a small production line for doing quick testing of prototypes. “We set up the project because we wanted to create technologies for solving health-related problems,” says Bautista.
An increasing number of companies are incorporating artificial intelligence into their business models. The study “The Impact of Artificial Intelligence on Entrepreneurship”, published by the organization Endeavor in 2018, says that the boom in this technology can’t just be seen in one country, but has an impact on every continent.
According to the report, international companies are harnessing the new capabilities that techniques such as machine learning can provide them to optimize their current operations or create new business models. The United States, Europe, and China are at the head of this movement.
“There aren’t as many companies as there could be in Mexico,” says Bautista. Tec de Monterrey has identified 26 startups in its entrepreneurial network that incorporate AI into their business model with a specific product or service.
For Enrique Cortés Rello, Director of the Tec’s Artificial Intelligence Hub, this is not disappointing news. To the contrary, it’s a window of opportunity. “We can take a very big step and position ourselves as the leading country in the region. We have everything we need to do so,” says the specialist.
In Latin America, entrepreneurship based on the use of artificial intelligence is in its infancy. The Endeavor study, based on 70 companies, reveals that most of these companies are young (63% were founded less than six years ago) and small (50% have between one and 10 direct employees). On average, artificial intelligence companies in Latin America had sales of 1.1 million dollars in 2017.
According to the report, companies in the region with a high level of specialization in artificial intelligence mainly concentrate on providing software and services to business, health, and media sectors. In order to operate, 60% of the companies in the study have received external financing from one or several sources: 33% from seed capital, 29% from private capital, 21% from series A or B rounds, and 17% from angel investors.
Where does the money come from?
Finding financing is one of the main challenges of these startups. “It hasn’t been easy in Mexico,” says Briana Osorio, co-founder and CEO of Signamy, a startup using AI to translate sign language. Until now, the project has received financing from its four partners, a Chilean state fund, and a crowdfunding campaign.
Endeavor believes the region should develop a strong investment ecosystem that is willing to finance artificial intelligence startups. It even hopes that there will be specialized funds, public-private initiatives, and specific recognition for the sector.
Cortés says that this will be solved in the coming years. “The money will find these startups. You just have to give them time and mentoring for that to happen,” he predicts.
Golden advice for entering the artificial intelligence market
It’s not just about designing a business model to incorporate the technology. There are other elements that entrepreneurs should consider.
- Balance your team. If you’re an engineer who wants to apply the technology to agriculture, you should have a specialist from that sector. Computer engineers can’t solve things on their own.
- Be patient. Bear in mind that artificial intelligence entrepreneurship is in its infancy in Mexico, and selling your project needs more explaining than a traditional business would.
- Approach your peers. Look for entrepreneurs from the world of artificial intelligence who can tell you what they’ve learned, where they are, how they got there, and where they’re going. All those experiences could be useful to you.