S'pore AI firms urged to develop real-world solutions to attract funds

Industry players say tailored tools are the way to go, instead of competing on cost

- Timothy Goh

Local artificial intelligence (AI) start-ups can capture investor interest by developing unique applications that provide real-world solutions for sectors like fintech, healthcare and analytics.

Industry players told The Straits Times that creating such tailored AI tools is the way to go, rather than solely competing on cost, especially as cheaper AI models become more widely available.

Mr Ben Cheah, partner at venture debt firm Innoven Capital South-east Asia, said cost efficiency is an important factor, but investors see the "real" investment opportunity in how AI start-ups leverage basic models to build unique applications.

"Investors will likely focus on companies that can develop unique, high-value applications rather than just those optimising for lower development costs," he said.

"It's not just about affordability but about defensibility and how well a start-up can create proprietary value on top of existing AI models."

In January, Chinese AI start-up DeepSeek made waves with its chatbot of the same name, claiming it was built at a fraction of the cost of other chatbots by industry giants such as OpenAI with ChatGPT.

DeepSeek is also an open-source model, which means that its code can be freely downloaded, copied and modified by anyone to develop their own applications.

Mr Cheah noted that AI remains a high-priority investment sector, but with lower-cost models like DeepSeek becoming more popular, investors are looking beyond AI development to how it can be applied in "transformative" ways.