%20(1).png?width=600&height=338&name=menu_thumbnail%20(4)%20(1).png)
%201.svg){kind=small}
The partners of Audere Capital discuss how best to approach investing in AI
Key Takeaways
- Artificial intelligence (AI) is likely to substantially change every sector of the economy at some point in the next decade. But investors should be careful when investing.
- If a company does not build all three “layers” - capturing data, organizing that data, and developing algorithms to use that data - then that product can more easily be commoditized.
- When investing in AI, you need to not only understand the technology, but also the specific use case. Who are the buyers of this and why would they pay more now?
Transcript
I’m Peter Ackerson, and I'm a general partner at Audere Capital.
Hi, I'm Maggie Sprenger. I'm also a general partner at Audere Capital.
Audere Capital is an early-stage venture company focused on investing in five areas of critical technology that are on the cusp of what we think will be a significant multi-decade long run of impact. We invest in early-stage technology companies focused on the intersection of national security and priority, deep tech, and ease, of course.
Looking at artificial intelligence, which is one of these critical technologies, it is going to change substantially every sector of the economy at some point in the next decade. I think it needs to be thought of as more than simply an algorithm, a learning model, or a neural net. It really is the combination of the ability, through new types of sensors, to capture new types of data. This data then needs to be used, stored, connected, cleaned up, and organized as a middle layer so you can house it and complement it with existing datasets.
On top of that, the third layer is the algorithms. If you don't have all three, then my suspicion, and I think evidence bears this out both firsthand and in the market, is that you will ultimately become commoditized. So, when looking at a category like A.I., you have to understand not only the technology but also the specific use case. Who are the buyers of this, and why would they pay more now? It's not simply because the experience is better. Yes, absolutely. But again, voicemail is better than having operators, and yet, over time, voicemail didn't turn out to be a hugely lucrative section of the market.
There will be lots of applications that make experiences better, that make fraud prevention more effective, that improve different types of drug discovery. But you also have to consider, when looking at the technologies, what is the value proposition and how will that evolve and where will that head over time. AI is one of those things that captures a lot of the imagination quickly but requires a very thoughtful approach, if you will, to effectively invest.
Important disclosures
Opto Investment Management, LLC (the “Firm”) is a wholly-owned subsidiary of Opto Investments, Inc. and is an SEC-registered investment advisor. Registration with the SEC does not imply a certain level of skill or training. SEC registration does not mean the SEC has approved of the services of the investment adviser. This website is operated and maintained by Opto Investments, Inc. Certain products described herein and institutional relationships may involve investment advisory services provided by the Firm. This website is presented for financial institutions and investment professionals only and is not intended for individual consumers or retail investors, unless specifically noted. Unless otherwise indicated, commentary on this site reflects the personal opinions, viewpoints and analyses of the author and should not be regarded as a description of services provided by the Firm or its affiliates. The opinions expressed here are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual on any security or advisory service. It is only intended to provide education about the financial industry. The views reflected in the commentary are subject to change at any time without notice. While all information presented, including from external, linked or independent sources, is believed to be reliable, we make no representation or warranty as to accuracy or completeness. We reserve the right to change any part of these materials without notice and assume no obligation to provide updates. Nothing on this site constitutes investment advice, performance data or a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. We disclaim any responsibility for information, services or products found on linked websites. Images and photographs are included for the sole purpose of visually enhancing the website. None of them show current or former clients and should not be construed as an endorsement or testimonial. All investing is subject to risk, including loss of principal. Historical performance is not a guarantee of future performance and clients may experience different results. This information contains certain “forward-looking statements,” which may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of the depicted investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting operations that could cause actual results to differ materially from projected results. See related disclosures at https://www.optoinvest.com/disclaimers.
