Investors are having a ‘tough time’ with AI and say it’s hard to tell what IBM, Google or AWS are doing
Billions of dollars in venture capital have flooded the AI space over the past year, as companies large and small have seen demand for new generative AI services. AI startups raised $12.3 billion between January 1 and July 16, according to According to TechCrunch Data excerpt from Crunchbase.
But this hype is not good for investors, who now need to sort through the good and the bad, the potentially useful and the completely useless.
“It’s a pretty tough time to be an investor,” said Justin Nguyen, general partner at Monk’s Hill Ventures. Fortune Brainstorm AI Singapore conference on Wednesday. “It’s hard to see what a thin layer sits on top of what IBM, Google, AWS are doing, a thin layer on top of something that’s pretty common, on top of these big language models — and what’s actually valuable.”
Values and data
Ultimately, the value will come from the data generated from the people using AI applications and how that data is used.
“When anyone can leverage it, what is proprietary to you?” Nguyen asked. “And how do you collect, aggregate, and get results from that data? A lot of the investments we see are just the thin layers on top.”
Ren Yeong Sng, managing director of AI strategy and solutions at Temasek, agrees that these are not “easy times for investors”.
Sng, however, focuses less on data as a source of value. Instead, he suggests that investors value a startup’s ability to continually attract customers. Continuous attraction means collecting more data, which in turn creates more value for the AI application. (AI models need large data sets to continuously learn and improve.)
“You need a consumer engagement channel to generate new, fresh data within the scope that you want to accumulate,” Sng said.
But even as investors struggle to figure out where to invest in AI, they are still using AI to help them figure out where to invest. “We ourselves use AI to help us identify interesting companies,” said Chan Yip Pang, managing director at Vertex Ventures, noting that VC AI has helped the fund find companies it would have previously missed. He explained that AI can help source information and choose the right investment goals.
And the AI space is likely to expand as startups emerge to meet enterprise demand for the new technology.
“Sixty percent of CEOs are under pressure from their investors to do something about AI,” said Juhi McClelland, general manager and APAC managing partner at IBM Consulting. “When CEOs are under pressure, when 60% to 65% of them are forced to do something, they want to react.”
CEO Daily provides key context for the news leaders need to know from across the business world. Every weekday morning, more than 125,000 readers trust CEO Daily for insights from—and inside—the C-suite. Follow now.
