A Scottish AI firm helping enterprises to build smaller, more focused AI models has secured £6 million in seed investment.

Malted AI takes the output of Large Language Models such as ChatGPT and distils them into smaller models. It says existing LLMs are overly general and result in very expensive enterprise solutions lacking the required pinpoint accuracy and performance. 

The seed round was led by Hoxton Ventures and joined by Creator Fund and angel investors.


It says that by allowing enterprises to apply small language models (SLMs) that solve domain-specific problems, it can solve one task near perfectly rather than doing thousands of tasks moderately well. 

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

“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, CEO and co-founder. 

“We are building a world-leading distillation platform that solves the highest value enterprise problems. We do this by using cost-effective small language models that take the most useful parts of LLMs but with a performance exceeding its bigger ‘sibling’ at specific tasks that require domain knowledge. 

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

Today, Malted AI is a 10-strong team with a track record in AI innovation. Its founders include an ex-quant trader, a former Meta researcher and a maths champion who lead a team of world-class LLM and applied AI talent hailing from DeepMind, Amazon, Google, Bloomberg and top PhDs, postdocs and academics from Scottish Universities. 

Malted AI also counts Jeff Dalton, chancellor fellow at Edinburgh’s School of Informatics, as an external chief scientific advisor. It will now look to double the size of its team.

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.” 

The firm previously raised a £1m pre-seed round led by Creator Fund in August 2023.

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