Google study: German start-ups are lagging behind in AI development

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German start-ups are lagging behind the European average in the use and development of artificial intelligence. This was revealed by a study conducted by Scaleup Global on behalf of Google for Startups. Around 23 percent fewer start-ups in Germany develop their own language models and AI applications than their European competitors. The difference is smaller when it comes to the use of AI. Here, the proportion of young companies from Germany is only just under three percent behind the European start-ups.

Start-ups use generative AI most frequently

Generative AI applications are most strongly represented in German start-ups. Two out of three young companies use the technology, putting them above the European average of 59.8%. However, only 4.2% of the companies surveyed in Germany develop their own tools, compared to 7.7% across Europe. With a usage share of 47%, German start-ups are significantly behind their European competitors when it comes to using AI for predictive analysis. Here, the prevalence is 54%.

When it comes to the use of machine learning, German and European companies are on a par at around 56%. However, only 8.8% adapt ML in Germany, while the average in Europe is 10.5%. German start-ups are least likely to use artificial intelligence in the field of robotics. It is only used in around 35% of companies there, compared to just under 39% across Europe. Overall, nine percent of German start-ups adapt existing AI technologies to their own needs, while six percent develop AI models and applications themselves.

AI deployment pays off for German companies

From a financial perspective, the use of artificial intelligence is worthwhile for many German start-ups. Around 53% state that they receive a positive return on investment from the use of AI. However, 40 percent see no financial impact from AI, while seven percent of German start-ups see AI as financially damaging. Product development, customer loyalty and marketing benefit the most from AI. In the area of finance, the benefits of AI tend to be somewhat lower.

More than 59% of German start-ups state that the use of AI has increased efficiency. However, just under a third reported no change. Artificial intelligence particularly often increases the efficiency of data processing. Two out of three companies noticed a positive effect here. The figure was 47% for the automation of routine tasks and around 36% for market analysis. AI proved to be less useful in the market launch of products and services. Around 56% of respondents consider their company to be more innovative since using AI, while just under 35% noticed no difference.

Start-ups are concerned with legal issues relating to AI

The introduction of AI applications is often hindered by political restrictions. The biggest challenge for German start-ups when using AI is the legal situation, according to around 40% of companies. A third of start-ups also lack usable data and sufficient funding. Nevertheless, there is an innovative ecosystem and strong cooperation between industry and research institutions in Germany.

At just under 63%, the majority of German start-ups have not noticed any impact of AI on the number of jobs in the company. Around 16% cut existing jobs due to artificial intelligence, while 21% hired new employees. According to a study by the digital association Bitkom, job security depends on the respective job profile. However, a recent survey by Microsoft revealed that three out of four German companies are planning to hire AI agents as digital workers.

For the study, the authors surveyed a total of 866 managers in European start-ups with a maximum of 500 employees outside of Germany and 357 managers of start-ups within Germany. The majority of the companies belong to the technology sector.

(sfe)