The rise and fall of an artificial intelligence star company – Element AI

Wrote by KellyOnTech, December 31, 2020

If you are an investor, or curious to learn more about investing, would you invest in an artificial intelligence platform company co-founded by a prestigious Turing Award winner and with more than 100 employees with PhDs? It sounds very promising, doesn’t it? Before you answer. Let me first introduce this company.

Element AI was founded in 2016. Yoshua Bengio, the Turing Award winner, was one of its co-founders. For those unaware, the Turing Prize is known as the Nobel Prize in the field of computer science. Element AI’s goal was to make a general artificial intelligence platform.

This company’s Series A financing raised a historic US$137.5 million in funding from a number of well-known investment institutions and large tech companies such as the National Bank of Canada, Canadian Development Bank (BDC), Intel, Microsoft and NVIDIA.

With Element AI’s platform, customers can solve large-scale AI problems by using the mature machine learning and deep learning tools provided by the platform and the best practices for building models. Simply put, you can get help at every stage of the entire life cycle through the platform: from data analysis, model preparation, algorithm optimization, to deployment and production.

Doesn’t it sound great? You don’t have to spend a lot of money to hire experts and engineers in the field of artificial intelligence. There is no need to worry about problems caused by lack of experiences, such as algorithm selection and model building that is not optimal and low model accuracy. In this way, traditional companies can benefit from the efficiency improvement and cost reduction brought by artificial intelligence technologies through this platform.

To date, Element AI has raised a total of 340 million Canadian dollars ( around 257 million US dollars) in funding. But by the end of November this year 2020, Element AI has been acquired by ServiceNow, a Silicon Valley software company. According to “The Globe and Mail” report, Element AI sold for less than $500 million. The purchase price was much lower than the company’s valuation after the 200 million Canadian dollars Series B financing conducted in September 2019. ServiceNow only retains the company’s technical elites, and Turing Award winner Yoshua Benjio will serve as their senior consultant. The rest of the employees were all let go.

Why has Element AI, which was highly sought after by government and technology giants been sold at such a low price? There are three major reasons:

1.Data processing and analysis

In order to be able to provide the industry with best practices and solutions for models, Element AI relies on cooperation with large companies. We know that the data processing cycle is very long, from data screening, including inputting documents and manual information into the platform, data cleaning, selecting key variables and so on. Especially for the selection of key variables, people with rich industry experience and professional knowledge are required as support, not just experts in artificial intelligence.

2. Out of focus

Element AI originally wanted to design a universal platform to provide algorithms and computing power support for companies in various industries. The company had a total of 8 vertical solutions. We know that artificial intelligence is a comprehensive discipline. If you only understand machine learning and algorithms, without the knowledge and experience in the professional field, you cannot make useful and targeted solutions.

3. The monetization model was not clear

Element AI had long relied on government support and Series A and B rounds of financing to support its high operating costs. The business model was not clear, and the meager income eventually resulted in massive layoffs.

These are the three main reasons the company was sold at such a low price. As an investor would you have foreseen these problems? To be successful and profitable a company needs a long-term sustainable business model.

Does your company have a long-term sustainable business model? You are welcome to contact us. We will help you refine and upgrade your business model.

I also shot a video for your reference.