Despite the economic challenges we’re facing right now, there’s a lot of excitement around AI, especially generative AI, or GenAI. Venture capitalists and investors are pouring big bucks into this technology. In fact, Goldman Sachs predicts that worldwide investment in AI will reach a staggering $200 billion by 2025.
But here’s the thing, even with all these investments in AI startups like Anthropic, Cohere, and Hugging Face, investors are still being cautious about which companies to back. It’s not just about throwing money at any AI company; they want to make sure they’re supporting the right ones.
One person who knows all about investing in AI is Rudina Seseri, the founder and managing partner of Glasswing Ventures. She’s been in the game for a long time, and in a recent Q&A, she shared some of her investment criteria.
So, what has Seseri seen when it comes to generative AI and general AI? Well, she’s been investing in AI-native companies that focus on enterprise security since 2010, and she’s seen the market evolve over the years. The first signs of AI emerged way back in the 1950s, but there have been some pivotal moments in its development. One of those moments was in 2006 when deep learning and neural networks came into the picture. Then, around 2010, AI started making its way into industries. And in 2017, we saw the rise of transformers through GenAI. Since then, GenAI has been steadily growing.
We’re currently at the peak of the AI hype, but as with any hype, there will come a time of disillusionment when people realize that not all AI models and applications are created equal. There will be a sorting out process where the poorly constructed AI solutions will fall by the wayside. But here’s the exciting part: as we move past the hype and into the solution phase, the demand for AI-native technologies in the enterprise will only increase.
So, as an investor, what does Seseri look for when considering where to invest her money? Well, first and foremost, she looks for exceptional teams that can execute. That’s a given in any industry. Secondly, she searches for unique and differentiated models, as well as proprietary data access. She wants to see outputs in the products that can be edited and verified. It’s not just a black box; she wants companies that allow for tweaks and improvements.
But here’s the kicker: Seseri is only interested in AI that’s absolutely necessary to solve a problem. If a solution can be achieved without AI, then there’s no need to bother with it. AI should only be used when it’s indispensable. And when it comes to developing AI products, the initial day doesn’t hold much value. It’s only after continuous training and data feeding that AI becomes truly powerful. However, even on day one, the AI minimum valuable product should create enough value for the customer to extract real benefits.
Now, let’s address the elephant in the room: security and privacy concerns in generative AI. Seseri tackles this issue by putting guardrails in place and developing tools to support them. For example, her firm avoids investing in companies that use facial recognition at an individual recognition level. However, they do support companies that ensure enterprises follow privacy regulations and have robust security systems.
When it comes down to it, Seseri’s main focus as an investor is execution. Can the founders not only innovate in theory but also in practice? Can they build a successful business that can sustain itself in the long run? That’s the ultimate question.
Investing in AI is not just about throwing money around; it’s about finding the right companies with talented teams, unique models, and a strong market opportunity. And at the end of the day, it’s all about execution. So, while AI may be the future, it’s important to invest wisely and ensure that we’re building a sustainable and secure AI ecosystem.