Malted AI, the Edinburgh-based artificial intelligence startup recently featured by DIGIT, has secured £6 million seed investment funding.

Founded in 2023, the startup ‘distils’ AI models, helping smaller companies build tailored AI models at a fraction of the cost.

The funding round was led by Hoxton Ventures, joined by Creator Fund and several angel investors.

To create smaller AI chatbots, Malted AI takes the output of large language models (LLMs), such as ChatGPT, and distils them into more compact models.

LLMs can often being too general and overly expensive for smaller organisations needing more specific AI chatbots and solutions.

The company’s technology allows smaller companies to apply small language models (SLMs) that use domain-specific information to solve domain-specific problems and queries. Instead of accomplishing general tasks moderately well, the goal is to complete a small range of tasks to perfection.

In its first pilots, Malted AI is already being used by financial and legal firms with continued rollout planned for the rest of 2024.

The new funding will be used in research and product development and well as recruitment, aiming to double 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.”

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Conceived from concepts that helped Ian Mackie, Carlos Gammel, and Federico Rossetto win the Amazon Alexa Prize in 2022, the team now has 10 members with track records in AI.

This includes an ex-quant trader, a former-Meta researcher and applied-AI talent from Google, Bloomberg, Amazon, Deepmind.

The company has 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