Scottish AI business secures £6 million seed raise

An Edinburgh-based artificial intelligence start-up helping enterprises to build smaller, more focused AI models at a fraction of the cost has secured £6m in seed investment.

Malted AI’s funding round was led by Hoxton Ventures, joined by Creator Fund and several angel investors.

The company takes the output of large language models (LLMs) – like ChatGPT – and distils them into smaller models. Existing LLMs can be overly general and result in very expensive enterprise solutions, lacking required accuracy and performance.

Malted AI’s technology allows enterprises to apply small language models (SLMs) that solve domain-specific problems with significant cost savings – instead of doing thousands of tasks moderately well, the aim is to do one task near perfectly.

This technology is already being used by financial and legal firms in its first pilots, with further roll out planned for the rest of 2024.

Malted AI will use the new funding to invest in research, product development and recruitment, as it doubles the team size.

“At Malted AI we see smaller as better when it comes to AI, a single, many-billion parameter foundation model is costly, too general and too slow – it’s not fit for purpose for the complex challenges enterprises face,” said Iain Mackie, Malted AI’s chief executive and co-founder. “We are building a world-leading distillation platform that solves the highest value enterprise problems.

“We envision enterprises using Malted AI to build small models to address singular challenges, effectively building a network of proprietary SLMs that are optimised for a single problem.”

Malted AI was born out of concepts that helped founders Iain Mackie, Carlos Gammel and Federico Rossetto win the 2022 Amazon Alexa Prize, beating more than 100 teams to come top of one of the biggest AI competitions.

It now has a 10-strong team with a track record in AI innovation – including an ex-quant trader, a former-Meta researcher and applied-AI talent from Deepmind, Amazon, Google and Bloomberg. Malted AI also counts Jeff Dalton, chancellor fellow at Edinburgh’s School of Informatics, as an external chief scientific advisor.

Bryan Gartner, partner at Hoxton Ventures, said: “Malted AI has the capacity to be one of Europe’s most notable AI companies as they flip the thinking and approach to AI adoption within the enterprise.

“Iain, Carlos and Federico are some of the brightest AI minds emerging from the birthplace of European AI – Edinburgh – and have close ties to the University of Edinburgh and the University of Glasgow.

“We are thrilled to be supporting Malted AI as they commercialise their platform and deliver outsized results for businesses in the tiny package of small language models.”

Malted AI has raised £7m in total investment, thanks to a £1m pre-seed round led by the Creator Fund in August 2023.

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