Artificial intelligence is increasingly becoming the tool of choice for companies in the mechanical and plant engineering sector when it comes to enriching their products with data-based added value. Start-ups are playing a key role as cooperation partners. Together with data specialist delphai, the VDMA has identified a total of 825 start-ups in 46 countries over the last ten years that offer AI solutions in the field of mechanical and plant engineering. Encouragingly, 42% of them come from Europe. In terms of the number of start-ups, Europe even surpasses North America (33%) and Asia (24%).

More money for AI start-ups in mechanical engineering

Another finding from the analysis is that more and more money is flowing into AI start-ups for mechanical engineering. Since 2015, the number of financing rounds has exceeded the number of start-ups. Almost 80% of the total of 13.2 billion euros invested in AI start-ups worldwide between 2010 and 2020 was accounted for by the period from September 2017 to September 2020. "Artificial intelligence for mechanical engineering will be the next stage of digital transformation. And our start-up scene in Europe has a lot to offer. Thanks to the high degree of networking between regional start-up and research networks and the vital mechanical engineering industry, Europe is a start-up hotbed for AI innovations in an industrial context. Germany is the center of gravity in Europe with more than a third of all start-ups," says Hartmut Rauen, Deputy Managing Director of the VDMA, explaining the results of the analysis. "Our strong Mechanical Engineering 4.0 domain attracts and creates dominance. As a user and provider of these start-up solutions, we as a European mechanical engineering sector are making a significant contribution to bringing AI to industry on a broad scale. This puts us in an excellent position in the global race."

New services and business areas through AI

The new VDMA study "Startup Radar: Artificial Intelligence - Navigator through the global AI startup scene for mechanical and plant engineering" provides a detailed insight into the AI startup scene for mechanical engineering. Using practical examples, it also highlights the importance and application potential for the industry. It becomes clear that the market for AI start-ups for mechanical engineering is not only characterized by high investment and funding dynamics, but that the solutions are also being used more and more in industry.

"Start-up activities are a strong indicator for the development of future markets. The investment momentum reflects the high financial expectations that investors have for the automation of industry. With AI as a key technology, start-ups are taking networked production to the next level. And the mechanical engineering sector is also recognizing this and is positioning itself to take the threshold to this evolutionary stage," explains Dr. Robin Tech, co-founder and Managing Director of delphai.

Broad field of application, high potential

The study confirms that artificial intelligence can be used to realize efficiency potential in various application areas of industrial value creation and develop new services and business models. Six innovation clusters are currently emerging in the mechanical engineering sector. These innovation clusters outline fields of application in which there is currently a high number of start-ups and which are highly relevant for mechanical and plant engineering:

• Predictive maintenance: AI-based predictive maintenance to reduce unwanted downtimes and extend the life cycles of operational systems
• Process Monitoring & Operational Excellence: Data-supported monitoring and optimization of production and business processes using digital twins
• Product Inspection & Quality Control: AI solutions for the automation of quality control and inspection
• Autonomous Factory & Process Automation: AI-based automation solutions and robots in and outside the factory
• Generative Design & Product Simulation: AI-supported creation of technical designs or simulations of production and application environments
• Supply Chain Intelligence and Demand Forecasting: Optimization of supply chains and forecasting of product demand using AI

Europe needs strong investment approaches

Although Europe has a good competitive position in the number of innovative AI start-ups for the industrial sector, it has weaknesses in the investment ecosystem. The study shows that the USA and China are the leaders in terms of the number of financing rounds and investment volumes. Of the total of 22 financing rounds in the three-digit million range in the survey period from 2010 to 2020, nine were accounted for by Chinese companies, eight by American companies, two by Japanese companies and one each by a German (Celonis) and an Israeli company (Innoviz). Europe therefore needs more approaches to channel corporate venture capital into promising start-ups of its own and thus strengthen the European economy. According to the study, this requires a different attitude in companies as well as government measures to promote the innovation and investment ecosystem.

Further information on the study and the start-up scene in the mechanical and plant engineering sector can be found in the "Start-up Radar - Artificial Intelligence":