Although I haven't quite cured cancer yet, I'm optimistic that if you give me a billion dollars I'll find a cure for cancer. So can I please have a billion dollars?

> very optimistic about their chances, and about their ability

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.

well if they aren't lying and the investors have an accurate picture of what the company is actually up to then there's no problem, that's how venture capital is supposed to work, VC investment is always risky.

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.