Effective funding programmes for AI startups

Turbo boost thanks to AI expertise and network

Leading stakeholders in national and international artificial intelligence (AI) hotspots have set up a unique ecosystem in Hamburg, which is now pivotal for AI startups and young companies. North German startups with AI-based business models find targeted support at the AI.STARTUP.HUB Hamburg as well as wide-ranging corporate and industrial expertise and potential growth conditions. The hub is a joint project by Hamburg Innovation GmbH, Artificial Intelligence Centre Hamburg (Aric), AI for Hamburg (AI. Hamburg), Exponential Innovation Institute, Machine Learning in Engineering (TUHH) and Start2. The initiative’s two AI funding programmes are financed by the German Ministry of Economics and Climate Protection. The AI Ideation programme targets potential entrepreneurs and teams seeking to develop an AI business idea, but who have yet to found a company. The Accelerator programme backs AI startups that are already on the market and wish to grow their business. For a finish, all those taking part in the programme present their projects and success stories during a festive graduation ceremony that causes a great buzz in Hamburg’s startup scene.

AI Ideation - six measures for an AI business

The six-month AI Ideation programme offers north German startup teams consisting of three people everything they need to found an AI company successfully:

Financial support of up to €37,500 per team (€1,500 per month per team member and an in-kind allowance of €10,500 per team)
Workplace in a central co-working space
Close interaction with startup consultants and AI experts
Workshops and 1:1 sessions worth €25,000 per team
Expertise on founding and working methods
Preparation for the German Ministry of Economics and Climate Protection’s EXIST startup grant

The AI Ideation links up startups with partners who provide tailored know-how for setting up a business model including digital businesses, prototypes exponential innovation, data science and AI. Attendance on at least one day per week is mandatory.

Successful participation in the Ideation Programme: AI for happy bees

The trio of founders behind the HIVESOUND AI startup completed the six-month AI Ideation programme successfully in 2023. The biologist Dr Michelle Maurer, computer scientist Julian Obrecht and AI expert Kevin Kraus are developing an AI-based application that analyses the buzzing of bees in a hive which are crucial to the pollination of crops. Thus, the business idea has the potential to spread to other markets. Germany alone has around 140,000 beekeepers and apiaries with around one million bee colonies. Unfortunately, honeybees are in danger of becoming extinct and are under enormous threats from climate change, pesticides and pests, making it almost impossible for them to survive without human intervention. HIVESOUND’s AI application uses the sound frequency of a beehive to recognise how the queen is faring and whether the bees are being disturbed. Microphones and vibration sensors in the hive record the bees while AI analyses the data collected.

"Before joining the AI Ideation programme, we had only developed the outlines of an idea during a project," said Kraus. At the time, the three founders had little experience of honeybees and beekeeping, but Maurer and Obrecht are catching up quickly thanks to a beekeeping course. Now, Kraus also knows a thing or two about beekeeping. "During the programme, we had an opportunity to approach beekeepers and gain a deeper understanding of our customers' needs.”

"During the AI Ideation programme, our initially vague business idea grew and became tangible thanks to the coaching sessions, workshops and pitches."

Kevin Kraus, Co-Founder of HIVESOUND

Turning idea into a real business model

The various kinds of coaching during the AI Ideation programme proved an enormous help developing their vision and business model, Kraus noted, adding: "We worked out how to really earn money with it. The result differs hugely from the information with which we initially applied for the programme," he recalled. The HIVESOUND team also delved deep into the local network. Commenting on their commitment, Kraus pointed out: "The network has been set up by people who have already built an AI company. You receive feedback and that helps you grow and progress.” At the end of the programme, the three were in for a special highlight. “Our idea won one of two audience prizes at the closing event. So our business idea had really developed during the programme and was met well. It sparked a bit of media coverage for us, which was definitely very special."

HIVESOUND's application for an EXIST grant was recently approved. The founders now hope to develop an app with initial AI functions and to prepare the spin-off. The collaboration with beekeepers and a medium-sized hardware manufacturer is also proving beneficial, as the startup seeks to expand to German-speaking countries and Italy.

"The very active AI network and the city's strong sustainability endeavors make Hamburg extremely interesting for us. In addition, the many green spaces and the proximity to beekeepers in the Luneburg Heath are very suitable for our project."

Kevin Kraus, Co-Founder of HIVESOUND

AI Accelerator programme - rapid development included

The Accelerator programme’s is ideal for AI startups. AI companies now on the market and listed in the commercial register undertake this six-month stint with other founders. The curriculum features brainstorming, incubation and scaling, tailored support as well as networking opportunities and other services:

Networking with movers and shakers in AI and with private, private-sector and institutional investors
Support preparing for investors
Using flexible methods to adapt the offer to customers’ needs
Coaching with R&D, launching on the market successfully and growth strategy
Support with organisation, human resources, communication, infrastructure and scaling from the pre-financing to the growth phase
Expertise in international markets, law, technology, politics, social and cultural aspects

The AI.STARTUP.HUB's extensive network gives participants immediate access to potential customers and helps with the search, placement and support of partners and associations for pilot projects. A shared calendar of events, an ecosystem database, the open Slack workspace and workshops give participants great opportunities to interact and share ideas with each other. Legal advice on AI-related topics such as software patents, copyright and commercialisation round off the funding programme’s portfolio.

FlowShare in AI Accelerator programme

The Hamburg-based miraminds’ “FlowShare” software is an integrative AI tool for bridging gaps in digital skills and helps employees to keep pace with a rapidly-changing economic sector. FlowShare documents corporate digital procedures and acts as an AI workforce enablement platform. Experts can automatically input their expertise in various applications and make it available throughout the company. The founders of miraminds GmbH, Dr Oliver Fluck, Sofia Gertzen and Louis Maywald, are taking part in the latest AI Accelerator programme which ends in March 2024. "Last summer, we were able to take our software solution to the next level of development thanks to generative AI. As a result, we immediately applied for the AI Accelerator programme," said Louis Maywald. So far, the team has enhanced its “FlowShare” software and set out its entrepreneurial values and mission. Given sweeping, fast-paced AI developments, Maywald remarked : "The current AI developments are like a roundabout on a playground that spins when you step on it. It's really cool when you're on top, but you can't fall off!"

"You don't have to go to Berlin or Munich to talk to AI experts. All the right people with knowledge are here in Hamburg and, thankfully, some of them are also part of the AI Accelerator programme."

Louis Maywald, Co-Founder of miraminds GmbH

The software FlowShare of the miraminds startup

From soup to broad AI expertise

Founded several years ago as a B2B software company, miraminds’s sales of FlowShare are now earning the founders a livelihood. "Before the programme began, we were quite well positioned entrepreneurially, but we lacked the broad exchange and tended to cook our own soup. Now, we really benefit from the expert network and especially from talks on all the rapid technical AI developments," said Maywald. The AI Accelerator programme is proving quite a challenge for the three founders: "It's amazing how quickly we progress. But there’s a lot in between. We have an ongoing business and the many workshops involve plenty of preparation and follow-up work as well as new tasks. If you want to overhaul your ongoing operations, you sometimes get the feeling that everything is slipping away from you." Asked about his “aha” moment, Maywald said: “During the mentoring, the realization that there is always an alternative to the beaten track and that we can change our way of thinking and our product proved groundbreaking. That is how we manage to really improve our organisation.

"We now have a clear idea of how to continue developing when the funding programme ends. The latest technical developments are forcing us to try out new things all the time. Thus, we try to spend 40 per cent of our time on enjoyable technical and organisational experiments. They don't bring any measurable business success at first. But we remain open to new technologies and any potential changes to our business model that they bring," said Maywald. The graduates of the AI Accelerator programme, on the other hand, usually focus on scaling and international market maturity. However, the right mindset is a must to reap the rewards of both programmes, said Erdmann, adding: "Participants should have a real desire to network locally and be prepared to query themselves and their business idea or existing business and be open to changing it, if necessary." The founder of HIVESOUND, Kraus agrees, and advises those interested in joining the AI Ideation programme to: "Try out everything and seize the knowledge and inspiration on offer. Don't think your questions are too stupid because this is an opportunity for really open feedback." Maywald echoes his advices, adding: "Do everything. Seize every opportunity. Compared to other programmes, the quality of the AI Accelerator is outstanding. During those six months, your company undergoes a development that would otherwise take two years.”

"The dynamic atmosphere and the good vibes during the programme seem to be rubbing off on our company as a whole. Things have never been as good!"

Louis Maywald, Co-Founder of miraminds GmbH

Tailored support for AI startups

Since 2022, the AI.STARTUP.HUB Hamburg has backed 49 AI startups in every economic sector thanks to its two funding programmes. Most participants are looking for pilot customers and investors, which can be challenging, according to Arthur Erdmann, Project Manager at AI.STARTUP.HUB. "However, we want to meet each team at the exact point in their entrepreneurial path and give them precisely what they need." Yet, their needs are not always immediately clear: "Thus, we scrutinize each business model and try to break it down in a generally understandable way and develop a scalable model. Only then can the next steps be determined. That is exhausting for the participants, but necessary," said Erdmann. Next, participants in the AI Ideation programme usually wish to apply for the Ministry of Economics and Climate Protection’s EXIST grant. The graduates of the AI Accelerator programme, on the other hand, usually focus on scaling and international market maturity.

However, the right mindset is a must to reap the rewards of both prgrammes, said Erdmann, adding: "Participants should have a real desire to network locally and be prepared to query themselves and their business idea or existing business and be open to changing it, if necessary." The founder of HIVESOUND, Kraus agrees, and advises those interested in joining the AI Ideation programme to: "Try out everything and seize the knowledge and inspiration on offer. Don't think your questions are too stupid because this is an opportunity for really open feedback." Maywald echoes his advices, adding: "Do everything. Seize every opportunity. Compared to other programmes, the quality of the AI Accelerator is outstanding. During those six months, your company undergoes a development that would otherwise take two years.”