Hire two or three ML people for the VC firm and have them audit the company's code. Anyone with some engineering experience is going to be able to tell if the company just shows you random tensorflow code or has actual data and a codebase.
With all these blockchain and AI mumbo-jumbo companies it would probably be a good idea to have more tech workers around rather than just business types.
On the engineering side, it's common for investors to ask for a list of software vendors and open source licenses. It would seem pretty legit to me for an investor to ask an outside firm to audit whether a product's code matches what they claim during the pitch.
All I know is that I had a short gig last year to do a code review on a potential acquisition, so this can happen at least sometime.
This was for a much smaller product, though.
Of course all of these are negotiable and not all investors do their due diligence, but it is in a well-performing VC's interest to do so.
this is the very definition of due diligence...you don't take their opinions as fact. to answer how:
* meet with their senior engineers * review code * talk to former colleagues * talk to former professors * review any academic papers, blogs, github repos * talk to customers or MVP users
If you don't have the first hand ability to directly evaluate their AI technology, or an extended network who can assist, you should not be investing in AI startups.
But there's an increasingly large amount of companies that are purely selling snakeoil that is way beyond any sort of grey area. You just need to look at the infosec scene.