R&D Tax Credits Provide New Opportunities for Artificial Intelligence Start-ups
AI-Startups
Some call it an artificial intelligence (AI) revolution. After years of slow but steady
progress on making computers “smarter” at everyday tasks, a
series of breakthroughs in the research community and industry
recently spurred momentum and investment in the development of
AI. In the U.S., there are at
least 1,500 start-ups processing languages, identifying
images, filtering ads for solicitation, detecting flaws in
security systems, offering real-time analytics for finance
professionals, and analyzing data for e-commerce brokers.
Healthcare and advertisement are the most common areas in the
AI industry, followed by business intelligence, security,
finance, the internet of things (IoT), wearables, education,
customer relationships management, e-commerce, and robotics. In
healthcare, the President’s Precision Medicine Initiative will rely on AI to find patterns in
medical data and, ultimately, to help doctors diagnose
diseases and suggest treatments to improve patient care and
health outcomes. In education, AI
has the potential to help teachers customize instruction for
each student’s needs.
Start-ups
and larger companies around the nation are constantly engaged
in Research and Development efforts aimed at solving these and
similar challenges. When they
create code, develop algorithms, troubleshoot software, and
perform technical experiments, they may be eligible for
federal and state Research and Development Tax Credits which
are available to stimulate innovation.
The
Research & Development Tax Credit
Enacted
in 1981, the Federal Research and Development (R&D) Tax
Credit allows a credit of up to 13 percent of eligible
spending for new and improved products and processes.
Qualified research must meet the following four criteria:
- New or
improved products, processes, or software
- Technological
in nature
- Elimination of uncertainty
- Process of
experimentation
Eligible costs include employee wages, cost of supplies, cost
of testing, contract research expenses, and costs associated
with developing a patent.
On
December 18, 2015 President Obama signed the bill making the
R&D Tax Credit permanent. Beginning
in 2016, the R&D credit can be used to offset Alternative
Minimum tax and start-up businesses can utilize the credit
against $250,000 per year in payroll taxes.
With the new legislation and given the technical nature
of AI, almost all AI start-ups will be eligible for the
credit. Figure 1 below shows the
potential value of R&D tax credits across an estimated
1,500 nationwide AI start-ups. As
shown in the chart, it is typical for each technical employee
to generate around $4,800 in R&D tax credits.
Figure 1:
AI Industry Potential R&D
Tax Credit Benefits
Artificial Intelligence
Artificial
intelligence technology is being used in a number of
applications. start-ups use machine learning and data mining
techniques to process different data that can be used to
manage money, connect people with similar interests, identify
faces, and much more. Online
advertisers use it to intelligently market to customers. E-commerce
and
technology companies, such as Braintree Solutions LLC (in
Chicago), use machine learning in conjunction with other tools
to prevent credit card fraud. Also, e-mail providers use
machine learning algorithms to identify spam.
Cutting-edge start-ups are increasingly finding novel
ways to apply machine learning tools to solve problems across
different industries. Some of these start-ups and machine
learning applications they are developing are outlined in this
article.
California
AI
Start-Ups (Silicon Valley)
6Sense Insights Inc.
6Sense Insights Inc., located in San Francisco, California,
provides a predictive intelligence platform that helps B2B
marketing and sales leaders identify market prospects based on
data science and time-sensitive intelligence. Their software
provides insight into who is in the market to buy, what
products they are buying, when they will buy, and where they
are in the buyer’s journey.
Sentient Technologies Holdings
Limited
Sentient Technologies Holdings Limited is a San
Francisco-based intelligent Systems Company focused on
building unique intelligent capabilities in deep learning to
solve real-world problems in industries such as e-commerce and
healthcare.
Ayasdi, Inc.
Ayasdi, Inc. in Palo Alto, California is an
advanced analytics company that offers a machine intelligence
platform and intelligent applications to Global 500
corporations, governments, and scientific research
institutions around the world. Clients use the Ayasdi platform
to solve their big data and complex data analytics challenges
and to automate formerly manual processes using their own
unique data. The secret behind Ayasdi's machine intelligence
platform is Topological Data Analysis (TDA). The company
describes TDA as the most powerful technique developed for
advanced analytics of big and complex data.
Botanic LLC
Botanic
LLC in Emeryville, California designs and builds products that
are capable of understanding and responding to human speech
(not just text or words without context).
People’s actions are better predicted in the context of
their feelings and attitudes than through text alone. Botanic machines capture a user’s
tone of voice, facial expression, body language, and nuances
in word choice. Botanic
characters
use speech and animation to provide contextually and
emotionally appropriate responses to human input.
Vicarious FPC
Vicarious FPC, Inc., based in Menlo Park,
California, develops artificial intelligence algorithms that
mimic the human brain. Currently, they are focused on visual
perception problems, such as recognition, segmentation, and
scene parsing. The company is
interested in general solutions that work well across multiple
sensory domains and tasks.
H2O.ai
H2O.ai in Mountain View, California operationalizes data science by
developing and deploying algorithms and models. Some of H2O’s
mission critical applications include predictive maintenance,
operational intelligence, security, fraud, auditing, churn,
credit scoring, user based insurance, predicting sepsis, ICU
monitoring, and more in over 5,000 organizations.
Viv Labs, Inc.
Viv Labs, Inc. in San
Jose, California develops an artificial intelligence interface
that enables users to interact with devices, services, and
other platforms for individuals. The AI platform enables
developers to distribute products through an intelligent,
conversational interface.
Infer Inc.
Infer Inc. is a Mountain View, California-based
company that delivers data-powered business applications that
help companies gain more customers. Its cloud-based solutions
leverage proven data science to rapidly model untapped data
sitting in enterprises, along with hundreds of external
signals from the web.
MindMeld Inc.
MindMeld Inc. is a San Francisco-based company
that powers a new generation of intelligent conversational
interfaces. After 3 years of
technological development and 10 patents, MindMeld launched
its core offering, the MindMeld platform, in 2014. MindMeld is
the first platform that makes it possible for companies to
create intelligent, conversational interfaces for any app or
device. MindMeld has been widely recognized as a leader in the
field of natural language understanding and was named by MIT
Technology Review as one of the world's "50 Smartest
Companies" in 2014.
Mintigo Inc.
Mintigo Inc. is a San Mateo, California-based
company that provides cloud-based predictive marketing
platform for marketers. The company also offers predictive
lead scoring models to identify sales-ready leads or potential
buyers and predictive lead scoring and data enrichment.
Skytree Inc.
Skytree Inc. in San Jose, California is a
leading enterprise-grade machine learning platform for big
data. The technology allows users to leverage investments in
big data by installing on existing infrastructure and
implementing a platform that includes data preparation,
automated machine learning model building, and easy model
deployment.
Sense.ly
Sense.ly is Inc. is a San Francisco-based
healthcare start-up that helps doctors reach patients through
bots and sensors. Typically utilizing smartphones, this
maximizes time and minimizes dollars, all while optimizing
patient health. Its solutions
help keep medical patients engaged as they communicate their
symptoms, medical history, and recovery progress on mobile
phones.
Anki
Anki is a San Francisco,
California-based company that builds on decades of scientific
research to make AI accessible to everyone.
Cloudminds
Cloudminds is a Santa
Clara, California-based AI company that uses a cloud-enabled
intelligence engine and a network of mobile sensors to enable
intelligent cloud robots.
Preferred Networks Inc.
Preferred Networks
Inc. is a San Mateo, California-based AI company that develops
deep learning technology that perceives, integrates,
understands, and analyzes diverse types of sensor data at
levels beyond human abilities.
Scaled Inference, Inc.
Scaled Inference, Inc. is
a Palo Alto, California-based AI company that uses AI as a
cloud service to enable a new generation of intelligent
software built by the masses and powered by an open shared
platform.
Inbenta Technologies, Inc.
Inbenta Technologies Inc. in San Francisco,
California provides natural language processing and semantic
search services. The company offers support services such as
dynamic FAQs, knowledge management, virtual assistance,
business website searches, e-commerce conversions, and
customer self-service.
StatMuse Inc.
StatMuse Inc. develops and markets a
cloud-based platform to analyze sports statistics. This San
Francisco start-up allows users to search for sports facts and
statistics through ordinary “natural” language.
Entefy Inc.
Entefy Inc. is a Palo
Alto, California-based start-up that provides communication
and digital interaction solutions. They offer a Universal
Interaction Engine—a context-aware message and data delivery
technology platform that provides access to various
conversations and connections across smart devices.
Jolata, Inc.
Jolata, Inc., in San Francisco, California is a
real-time big data analytics software company that helps large
network operators visualize and optimize their global
networks.
New York
AI Start-Ups (Silicon Alley)
Fuse
Machines Inc.
Fuse Machines Inc. is a
NYC-based start-up that helps inside sales teams sell more by
applying AI, natural language processing, and Machine
Learning.
Persado Inc.
Persado Inc. is a NYC-based AI company that
develops a cognitive content platform—a smart system that
combines natural language processing and machine learning
technologies to machine generate precise words, phrases, and
images that inspire any given audience to act every time.
X.ai Inc.
X.ai Inc. in NYC builds and operates an AI
personal assistant that schedules meetings using email for
business customers.
Wade & Wendy Inc.
Wade & Wendy Inc. is a NYC-based AI powered
platform for the recruiting space. Wade
is an AI career assistant, helping people navigate their
careers and discreetly learn about new job opportunities.
Eclipse
Market
Solutions
LLC
Eclipse Market Solutions LLC is a NYC-based AI
start-up that provides customized services to help clients
simplify trading. They offer trading software solutions, risk
management consulting, strategy analysis, position evaluation,
and financial modeling.
Intelligent Artifacts, LLC
Intelligent Artifacts,
LLC is a NYC-based AI start-up that provides a cloud-based or
on-premises environment for quickly creating and deploying
machine intelligence. The company guides their customers,
helping them integrate or embed their technology in their
products and services.
Digital Genius
Limited
Digital Genius Limited is
a NYC-based AI company that brings practical applications of
artificial intelligence into the customer service operations
of global companies. Its Human+AI Customer Service Platform
combines the best of human intellect and AI, enabling
companies to live up to and exceed rising consumer
expectations.
Flatiron Health Inc
Flatiron Health Inc. is a NYC-based AI company
that organizes the world’s oncology information and makes it
useful for patients, physicians, life science companies, and
researchers. Their technology connects community practices and
cancer centers on a common technology infrastructure to
address key healthcare challenges. Their goal is to power a
national benchmarking and research network to transform how
cancer care is delivered.
AI Cure Technologies, LLC
AI
Cure Technologies, LLC in NYC uses AI in mobile devices to
confirm medication ingestion in clinical trials and high-risk
population.
AskTina
AskTina is a
NYC-based AI company that develops technology to significantly
reduce the amount of time an entrepreneur spends recruiting
and managing virtual assistants.
Hyperscience
Hyperscience is a
NYC-based AI start-up that builds general purpose AI platforms
for other developers to easily build machine learning
applications.
Mobile ROI
Mobile ROI is a NYC-based
AI start-up that develops marketing automation software to
contextually engage, educate, reward, and delight at every
touch point along the customer journey.
Customer Matrix Inc.
Customer Matrix Inc.
is a NYC-based AI company that brings the power of cognitive
computing to organizations. Its
technology serves on the front line of sales and customer
service excellence. It is ideal for converting up-selling,
cross-selling, and churn risk reduction in today's competitive
markets.
Massachusetts
AI
Start-Ups
(Rt.128)
DataRobot
DataRobot is a Boston, Massachusetts-based AI
company that develops data science and machine learning
platforms for business analysts, expert data scientists,
software engineers, and IT/Data professionals.
Affectiva Inc.
MIT-spinoff,
Affectiva Inc., is a Waltham, Massachusetts-based company that
offers emotion recognition technology based on patented
science that uses deep learning. As
of this writing, the technology analyzed over 4.5 million
faces, comprising of the world’s largest emotion data
repository. This helps Affectiva to derive unique insights
with high accuracy.
Nara Logics Inc.
Nara Logics Inc. in
Boston, Massachusetts is a “synaptic intelligence” company. Synaptic intelligence is a branch of
AI that combines neuroscience and computer science. The
companies’ synaptic intelligence is a solution to make
context-sensitive adjustments to recommendations in order to
help companies make smarter decisions.
North
Carolina AI Start-Up (Research Triangle)
Automated
Insights Inc.
Automated Insights Inc.
is a Durham, North Carolina-based company that automates and
expands the production of content and communicates it in ways
never before possible. They offer
the only open Natural Language Generation API. By leveraging
speed and scalability, users can deliver personalized content
instantly to millions of people, each one uniquely tailored to
the reader.
Miami AI
Start-Ups
Magic Leap Inc.
Magic Leap Inc. is a
Miami, Florida-based AI start-up that
is working on a head-mounted virtual retinal display. This
superimposes 3D computer-generated imagery over real world
objects by projecting a digital light field into the user's
eye.
Cylance Inc.
Cylance Inc. in
Miami, Florida is one of the fastest growing companies in the
history of cybersecurity. The company applies AI and machine
learning to crack the DNA of malware.
Albsbridge, Inc.
Albsbridge, Inc. is a
Miami, Florida-based AI start-up that uses AI technology to
source relationships and client advocacy.
Care Angel Inc.
Care Angel Inc. is a
Miami, Florida-based AI start-up that develops a remote
monitoring and data analytics platform to help caregivers and
seniors live as best a life as possible.
Seattle
AI Start-Ups
Ozlo
Ozlo is a Seattle, Washington-based personal AI
machine that makes finding information from smart phones
faster and easier.
Tijee Corporation
Tijee Corporation is a
Seattle, Washington-based AI start-up that builds cutting edge
solutions for the next generation of smart home systems. With
the technology, homes can interact with their owners in an
intelligent way.
Cyntient Inc.
Cyntient Inc. is a
Seattle-based software development company whose innovative AI
solution opens the door to create a gaming experience
enlivened by virtual characters that analyze, react to, and
learn from their environment, each other, and the player's
behavior.
The Allen
Institute for Artificial Intelligence
The
Allen Institute for Artificial Intelligence
is a research institute funded by Microsoft co-founder
Paul Allen to achieve scientific breakthroughs. They construct
AI systems with reasoning, learning, and reading capabilities. Some
of the ongoing projects at the incubator are listed below.
Aristo
Aristo is a system
that acquires and stores a vast amount of knowledge in
computable form, then applies this knowledge to answer a
variety of science questions from standardized exams for
students in multiple grade levels.
Semantic Scholar
Semantic Scholar leverages AI expertise to help
researchers find the most relevant information efficiently.
The technology utilizes methods from data mining,
Natural-Language Processing, and computer vision to create
powerful new search and discovery experiences.
Project Plato
Project Plato is focused on extracting visual
knowledge from images, diagrams, and videos to enrich
knowledge bases that are conventionally derived from textual
resources.
Euclid
Euclid is AI technology
designed to solve math problems, specifically in geometry. One application being developed is
GeoS—an end-to-end system that solves high school geometry
questions. Its input is question text in natural language and
diagram in raster graphics, and its output is the answer to
the question.
Tennessee
AI Start-Up
Digital Reasoning Systems, Inc.
Digital Reasoning Systems, Inc. is a Franklin,
Tennessee-based cognitive computing company that offers
services to intelligence agencies and financial institutions
in the United States. At Digital Reasoning Systems, Inc,
engineers create technology that learns and gets smarter with
the goal of helping humans see the world more clearly to solve
some of the most difficult worldly problems.
Technological
Challenges
All the
previously mentioned start-ups work to solve technological
challenges in the AI industry. Although
improvements in computing power and big data analysis have
opened the door for major innovations in the field of AI, such
advancements also gave rise to the concern of extraneous
information or “noise,” distorting the accuracy of predictive
models.
Developing and refining algorithms is another
technological challenge. Engineers and computer scientists
routinely experiment with different algorithm sets in order to
flush out meaningful results from noise. The goal is to flush
out the types of algorithms and dataset combinations that are
good at picking out the structure of the problem so they can
be studied in more detail with focused experiments. Those top
performing algorithms are then refined to be more efficient, a
process known as algorithm tuning.
Another issue common to the industry is the
slow process involved with the data modeling stage. This stage
requires data scientists to iterate multiple data models and
run them against historical datasets to identify the most
accurate predictive models. But
the process is so slow that computer scientists often spend
downtime by exercising, napping or leaving the office.
Some innovators, such as Skytree Inc. in San Jose, California,
are trying to automate the process. They
recently released Skytree 15.1, a product aimed at doing just
that. Martin Hack, chief product officer at Skytree, said
about the technology, “In data science, creating models is an
iterative process. You create
models, run them, compare the results against historical
accuracy, and then put the most accurate into production. So
there are usually three steps: train, tune and test. What we
have done is combine this into one. It’s potentially a huge
time-saver for data scientists, and reduces time-to-market for
data models.”
Conclusion
Artificial intelligence (AI) is a quickly emerging technology. Advancements in this field can solve
a number of technological challenges. Engineers and computer
scientists are constantly making developments within this
sector. start-ups and established companies may be eligible
for federal and state Research and Development (R&D) tax
credits which are available to stimulate innovation.