AI Investing – The Artificial Intelligence industry has attracted more than $10.8 billion in funding from the venture capitalists. From the last five years, there is a lot of excitement in the investor community. To back deep tech companies working on engineering innovation using augmented reality, artificial intelligence, and machine learning. While all other start-ups are eagerly looking for capital, investors are searching for AI startups that have achieved scalability and meaningful tractions.
In the 1980’s AI industry experienced quite a boom and enjoyed a great deal of attention and rapid investment. Rather than considering the value of the startups’ ideas, venture capitalists were looking for interesting technologies to fund. This is the reason why the first generation AI companies have already disappeared, transformed, or gone defunct.
And this is the reason why nearly around 40 years later, the industry is facing the same issues. Though the technology is more advanced and complex today and does not intrinsically create customer value. That’s why capitalists are not investing in deep tech and are investing in deep value.
The Issues that Revolve Around AI Investing in Verticals
The ability of the Artificial intelligence industry is often over promised and often hyped. And the domains that AI startups are targeting can be more powerful. By focusing on the technology and deep tech verticals like AI or blockchain, startups are ignoring the most commercially valuable element required by a growing company.
So, what problems are they solving? What deep value are they creating?
Many startups are getting caught in this kind of push. For example – Original Stitch, a startup in California, claimed to deliver custom-made shirts using computer-vision software that analyzed the size by the photos uploaded on the company’s website. Initially, Original Stitch generated more than $5 million in the name of big investment. But unfortunately, the shirts that company produced were either too tight or the sleeves were too long. The organization had to ask customers to submit their shirt sizes. After all, the customer’s requirement is a well-fitted shirt, customers don’t care about the technology behind it.
Though advancements and breakthroughs continue. AI systems are far from perfect, and if a startup cannot create value with deep tech, the product itself will not be necessary. Instead, it is important to invest in an organization that leverages AI to deliver deep value to their customers.
The Future Should Be Focusing On Deep Value
AI Investing – An organization claiming to be AI-powered, recognizes itself to be one of the quickest, forward-thinker, and commercially sustainable organizations. But being future proof doesn’t necessarily mean that the organization has the futuristic technology. In fact having a good business model with humble everyday technology is often more sustainable in the long term.
The most powerful organizations in the tech world – Apple, Google, Amazon, Alibaba, Alphabet, Microsoft, Facebook, and Tencent did not start working on AI or other deep tech software. But instead, they started off by trying to solve problems using shallow technology.
Alibaba and Amazon are reputed eCommerce platforms while Tencent is an internet chat system. And now all three are heavily investing and researching. As well as acquiring new and innovative technologies that will continue to expand their brands.
An investor who is looking at funding in deep tech would not have invested in Facebook 15 years ago. At that time Facebook was a social network site built on PHP. But since Facebook has launched, the company has developed deep tech into its products by making use of new innovation to expand its value and making its product better. In result, this led them to deliver deep value to its customers.
So, this great example ensures that investing in an organization with deep value is much more profitable than investing in deep tech.
AI Investing – Another issue that arises with deep tech
Today’s upcoming technologies becoming a standard over time. Not long ago, organizations were running behind high-resolution screens that were both novel and technically needed. But today they are all universally available.
While making investments in deep tech, you need to ask two main questions. Where will everything land up and what value will it create? Then and only then, consider whether AI and deep tech are necessarily involved in creating the future of your business. It is not about whether you are investing in AI, it is all about whether it will hold a long lasting value.
If you are looking for any consultation regarding the implementation of Artifical Intelligence, visit Decondia.
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