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AI has huge potential to make businesses more sustainable. It is already being deployed by companies including Google to cool data centres, in hospitality to track and reduce food waste, and by governments such as Indonesia and Peru to show near real-time vessel movements in the ocean to combat illegal fishing.
In 2023, governments and businesses are continuing to strive towards improved sustainability. Environmental, social governance (ESG), is high on boardroom agendas. Businesses want to work with suppliers and partners who have similar values and are equally committed to sustainability. And, less altruistically, ESG is increasingly a focus for scoring when tenders are awarded, or investment is levied.
From a legislative stance, businesses will soon have to comply with the Corporate Sustainability Reporting Directive, which obligates financial market participants to disclose their non-financial and diversity information.
Businesses are therefore actively looking for green solutions that can also improve their marketability and, ultimately, their bottom line. AI is being touted as something that can manage environmental impacts and climate change, whilst also improving business efficiency – a win-win.
Is AI as green as it seems?
When environmental claims are unproven, over-inflated or just incorrect, this is ‘greenwashing’. When implementing AI solutions, there is often little detail given at the micro-level on how AI will save the planet any more effectively or efficiently than traditional computer-human operations.
The Advertising Standards Authority (ASA) has been cracking down on greenwashing in advertising, recently issuing reprimands to HSBC, Alpro and Innocent, amongst others.
When implementing AI and measuring the energy-savings it can produce, this needs to be offset against the electricity consumption of AI systems themselves, as this is potentially substantial. It has been calculated that AI’s global carbon footprint might foreseeably be equal to that of the aviation industry.
Until all AI is powered by renewable electricity, including using sustainable data sources, AI’s energy consumption must be taken into account when making claims about the energy-saving capabilities of AI. It is only a matter of time before AI greenwashing undergoes the same scrutiny by private and public auditors and is more heavily legislated against and regulated.
Competition bill looms
We are imminently waiting for the UK Digital Markets, Competition and Consumer Bill, under which it is expected that companies could face fines of up to 10% of their global turnover for breaches of consumer law.
The bill is expected to grant regulators with new powers to use against companies that make misleading environmental claims. This bill, combined with the new EU AI Act, and divergent ‘sector by sector’ approach to regulation in the UK, is going to increase the regulatory considerations for businesses deploying AI technologies.
This is only going to increase, as we see other technologies where AI is crucial, such as the metaverse, develop.
Could AI deliver better ESG standards?
From efficiency gains in agriculture and energy supply to sustainable supply chains and environmental monitoring, the claims made about the green potential of AI are vast.
But there is little published information about how AI use in these fields will be deployed; how AI software will differ from non-AI software; and whether that difference will actually be beneficial in reducing the rate of climate change or meeting biodiversity and ESG goals. Developers and users risk being challenged on such green claims in 2023.
AI is already being used as a tool to combat greenwashing. It is being deployed to analyse a company’s publicly available information on the web to detect early signs of greenwashing or identify related risks.
The hope is this increased scrutiny will force higher ESG standards. There is an irony to being caught out by an AI system for making false statements about the energy efficiency and ESG benefits of the AI system your business has deployed.
Practical guidance
So where does this leave businesses in the brave new world of AI, greenwashing and sustainability? Here are some practical steps to keep in mind.
– Marketing statements and representations made by an organisation regarding its ESG commitments and how AI is improving its sustainability must also take into account the AI systems themselves and the energy the AI consumes, not just their application. This means involving legal teams in deploying these technologies and the statements made concerning their sustainability.
– Where AI is being used to enhance ESG standards, proper consideration needs to be given to how the delivery of these tools can be monitored and assessed. As with the deployment of all AI technologies, there should be someone in the business who has an understanding of the ‘output’ and can verify its accuracy and identify potential issues and areas to improve on.
– Customers should review and be prepared to challenge AI and ESG claims made by suppliers to ensure they are accurate. Where overambitious statements have been made, legal advice should be obtained.
Payments provider Paytrix has landed $18.3m (£14.8m) in Series A capital led by Unusual Ventures, Motive Partners and Bain Capital Ventures.
The London-headquartered fintech’s payment API is used by businesses to send, receive and store payments.
Aran Brown, CEO and co-founder of Paytrix, said the company is aiming to slot into the middle gap between “inefficient local solutions” and “tier-one global providers”, which are only available to the largest companies.
“People have been telling us that this is the worst time to raise funding in 20 years,” said Brown. “Given that backdrop, we’re delighted to have attracted such high-calibre investors.”
Fin Capital, Better Tomorrow Ventures, Hambro Perks, ClockTower Ventures, The Fintech Fund, D4 Ventures and unnamed angels joined the lead investors in the round.
It comes off the back of a Paytrix £5m pre-seed round led by Hambro Perks last year.
Matt Harris, partner at Bain Capital Ventures, said: “Paytrix is addressing a critical need for businesses operating in an international marketplace.
“The complexity and cost of cross-border payments have long been a major pain point for companies looking to scale, and Paytrix’s solution neatly tackles these challenges.”
Paytrix is also based in Ireland where its customer support, heads of finance, IT and operations reside.
The fintech company will use the proceeds of the Series A capital to fund overseas growth, with its Irish base becoming the centre for global operations.
London-based asset manager and active fintech investor Fasanara Capital has secured $200m (£169.4m) from a Canadian pension fund.
Fasanara, which has previously invested in UK-based fintechs like Playter, Twig, and Storfund, holds around $3.5bn (£2.96bn) in assets.
The new funds will be deployed through its alternative credit strategy to provide loan investments to fintech firms.
“This capital will help bolster our portfolio companies, by providing them with the certainty that they can access a range of financial products, should they need them,” Fasanara Capital CEO, Francesco Filia, said.
“At a time when the wider capital market is experiencing such uncertainty, Fasanara’s portfolio companies know that they belong to an ecosystem which is strongly supported by some of the largest institutional investors in Europe and North America.”
Filia described the investment as “another major milestone for Fasanara”.
The asset manager did not disclose the name of the fund that provided the financial backing. It is understood to be one of Canada’s largest pension funds.
In May, Fasanara Capital launched a $350m (£296.5m) investment fund to target early-stage fintech and cryptoasset startups in Europe.
While the bulk of the firm’s assets is based in Europe, including the Italian buy now pay later unicorn Scalapay, the firm has ambitions to expand its position in the US.
Oxford Medical Simulation, a London, UK-based provider of realistic virtual reality healthcare training, raised £2.1M in funding.
Backers included ACF Investors, and Dr Nicolaus Henke.
The company intends to use the funds to expand its product offering, and to grow into US.
Founded by Jack Pottle and Michael Wallace in 2017, Oxford Medical Simulation delivers virtual reality medical simulation – training healthcare professionals to provide patient management without risking lives. The focus is on clinical decision-making under pressure, crisis resource management, team interaction and patient engagement. Clients include a wide range of NHS Trusts and universities as well as US universities, including John Hopkins University and Duke University, and several US health systems.
Authentic Brands is officially the new owner of Ted Baker. The US-based giant has completed the deal tabled this summer for £211 million, planning to convert the fashion retailer to a licensed business model.
The company has been delisted from the London Stock Exchange.
Authentic Brands, whose holdings include various apparel, athletics, and entertainment brands, including Forever 21, Nautica, Juicy Couture and, most recently, Reebok and the David Beckham brand, said it plans to leverage its network of experts and operating partners to convert the business model.
This includes conversations “with leading operators in key regions to manage the manufacturing, physical retail, e-commerce and wholesale operations of the Ted Baker business”.
Also among the big changes ahead for Ted Baker will be a major push into the North American market.
Authentic Brands also said it aims to build up Ted Baker’s brand image in tandem with the current management team. The New York-based company also opened its London-based European office earlier this year.
Authentic Brands' chief executive and founder Jamie Salter said: “This uniquely British brand enhances our fashion portfolio and further reinforces ABG’s brand presence in the UK, Europe and the Middle East. The purchase of Ted Baker is in line with our strategic focus on growing and diversifying the portfolio through the acquisitions of brands that originate from outside of the US.”
While the negotiations with Authentic Brands were ongoing throughout the summer, Ted Baker continued to open new key stores in Basingstoke and Merry Hill and has added to its management team, appointing James Waller as Head of Sales for Menswear in September.
Latest trading figures published in September for the 14 weeks to 29 July showed revenues grew 3.4% for the period compared with Q2 a year ago. But it was down over 28% compared with the second quarter in the pre-pandemic period.
However, it noted the performance was “encouraging” saying the gains were led by stronger sales in physical stores across both its own shops and those of its partners, partially offset by continued disruption from re-platforming that adversely affected its e-commerce sales.
Feel, a London, UK-based provider of digital health and wellness subscription brand, raised £10M in Series A funding.
The round was led by Velocity Capital Advisors, with participation from Btomorrow Ventures, Fuel Ventures, TMT Investments and ITV AdVentures.
The company intends to use the funds to continue to strengthen its position in existing markets and bring their products and strong brand to new international territories.
Feel has an expanding product range across supplements, functional food and beauty
Led by Boris Hodakel, Founder and CEO, Feel is a digital health company that provides clean label nutrition products such as vitamin supplements and functional food with innovative formulas backed by research and science.
Stability AI, a London, UK-based community-driven, open-source artificial intelligence (AI) company, raised $101M in funding.
The round was led by Coatue, Lightspeed Venture Partners, and O’Shaughnessy Ventures.
The company intends to use the funds to accelerate the development of open AI models for image, language, audio, video, 3D, and more, for consumer and enterprise use cases globally.
Led by Founder and CEO Emad Mostaque, Stability AI is the company behind Stable Diffusion, a free and open-source text-to-image generator that launched in August. Since launching, the product has been downloaded and licensed by more than 200,000 developers globally. Its consumer-facing product DreamStudio, an open-sourced image generation model that cultivates autonomous freedom to produce incredible imagery, grew to over a million registered users from more than 50 countries who collectively have created more than 170 million images.
Cybersecurity company OutThink has landed $10m (£8.8m) in seed funding for its software that identifies risky cybersecurity behaviours among employees.
Founded in 2015, OutThink’s software provides businesses with an analytics dashboard to monitor and identify weak areas in security that stem from human activity, such as forgetting to lock a computer.
Chief information security officers can view a risk rating of specific departments to raise awareness and implement preventative measures.
Flavius Plesu, founder and CEO of OutThink, said: “The idea for OutThink was born out of frustration that existing solutions on the market were failing, yet it also came from a passionate belief that if we engaged people beyond traditional security awareness training into human risk management, we could make them the organisation’s strongest defence mechanism.”
OutThink says that 91% of data breaches are due to human behaviour. Its software is used by the likes of NatWest, Rothschild, Danske Bank and Whirlpool.
The OutThink seed round was led by AlbionVC along with TriplePoint Capital, Forward Partners, Gapminder and Innovate UK.
Headquartered in London, OutThink’s latest raise brings its total funding to $11.4m (£10m) and comes after its £1.2m seed round in 2020.
“Flavius’s vision for OutThink and his ambition to overturn outdated and conventional thinking around cybersecurity are rapidly being realised because his team understand implicitly what their customers need,” said Cat McDonald, investment director, AlbionVC.
Venture capital firm AlbionVC also led low-code software startup Toqio’s £17.8m raise last month.
Insurtech Lukango has closed a £275,000 pre-seed investment round for its insurance policies aimed at small businesses.
Lukango offers two products: “Fix” a set price plan and “Flex,” which charges based on the size of a business for a range of policies such as public liability, employers’ liability and product liability.
Joanne Safo, CEO and founder, said: “We set out to champion the underserved micro business community and change the face of the insurance industry and are incredibly proud to have the backing of experienced investors that truly believe in our vision.”
Backers in the Lukango pre-seed include the previous CEO of Bupa and board member of Admiral Group Evelyn Bourke, the founder and ex-CEO of Digital Partners Andrew Rear, and former senior advisor to the Nasdaq, Mark Hunt.
The London-based insurtech was founded last year by Safo. Before this, she previously worked as a director for Orisa Consultancy an insurance and technology consulting firm and at Digital Partners.
Safo added: “Our skills in the use of technology in the insurance industry and innate strategic, scaling and execution capabilities are significant assets on our journey to better serve today’s microbusiness owners.”
Health insurtech Peachy last month raised £1.5m for its app that gives access to private health services.
London’s West End is best known for its restaurants, bars, and historic theatre district. Thanks to a growing number of high-growth artificial intelligence startups locating in the area, the West End may soon be considered the UK’s latest AI cluster and a global hub for the industry.
At first glance, the area within western central London is unlikely to be thought of as the centre of a movement for UK-based AI startups. Historically, digital startups in AI and beyond have been drawn to East London, which from the late 2000s and early 2010s became one of the most prominent centres for UK tech.
But a cluster of high-growth AI firms entering stage right into London’s West End may now be giving the East a run for its money.
“What you’ve got in London, is a nexus of a capital city with governance and legislation and world-class universities within a short ride, like Imperial [College London],” says Alex Burton, director at Rebellion Defence, an AI company working in the defence sector that was recently valued at $1bn.
Founded in 2019, Rebellion Defence has become a major player in the AI business, becoming a unicorn on the back of its $150m funding round in September 2021. The AI startup is by no being alone in locating in the tourist hub around the West End.
Based just off Soho, Synthesia – currently estimated by Dealroom to be valued at $286m – has developed an automated technology that converts written text into a video presented by a synthetic avatar.
And just two minutes from Synthesia’s London headquarters is Encord, an AI computer vision labelling firm and Y Combinator alumni.
Whether consciously on the part of the companies or not, a pattern appears to be forming of promising AI startups basing their operations in the West End.
“I think it’s because the talent is here, it’s very well positioned with respect to good universities and being able to get good European talent and also just global talent, people around the world come here,” says Encord co-founder and CEO Eric Landau.
“And the VCs are now recognising that, so the money is following. The talent was always here, but now the money is following. And as the money is coming, this tech hub is really blossoming and burgeoning.”
Read the full article here.