AI is evolving at light speed, and the money is following. PE and VC firms moving to stake their claim to the right investments need to make sure they are poised to lead the AI conversation meaningfully.
I, for one, welcome our new AI overlords.
This trope – normally used as a tongue-in-cheek, reluctant acceptance that artificial intelligence is here to stay – may as well be emblazoned in the lobby of every asset manager worldwide. The AI craze is well and truly upon us, and investors are lining up to seize the opportunity for returns because of it.
The result: eye-popping valuations for public tech stocks amid excitement for generative artificial intelligence. Just look at Nvidia Corp, the chipmaker which last month joined the exclusive $1 trillion market value club, reflecting the surge in interest in AI. Whether you think that valuation is appropriate or ambitious, it reflects the current appetite for the technology’s potential.
Fund managers are patrolling the private markets as well. Last week, the Financial Times’ Lex column took a deeper look at venture firms, which are looking to tap into unprecedented dry powder reserves to find interesting AI plays and deliver outsized returns. Some firms are even considering not-so-subtle fund strategy shifts to promote themselves as AI specialists.
And so, it understandably follows that private equity and venture capital investors are sensibly thinking about how to have a seat at the table amongst other AI thought leaders.
Full disclosure – I don’t purport to be an expert in AI technology, or where to find alpha in such a vast and complex sector disrupting countless industries.
I do, however, bring a level of authority on what types of content engage and persist when it comes to fast-moving trends, developed over 20 years of stress-testing thought leadership campaigns in the market.
Here are three essential tips for those looking to make a lasting impression in the AI space to build credibility with investors and target companies alike.
Think Vertically not Horizontally
AI is becoming as ubiquitous as the internet itself. Sophisticated readers don’t need surface level commentary on the state of play. What is more interesting is how AI is disrupting traditional models in specific sectors.
As you are developing your commentary themes, think about topics more granularly in specific industries like retail, education, manufacturing, hospitality, etc. You will showcase your expertise and imply the investment theses behind your fund strategies in AI in a much more meaningful way.
The rush for alpha might mean the occasional risk on a fast-moving technology, but your commentary needn’t try too hard to overstate impacts or valuations. Previous sea-change moments in technological evolution – such as blockchain, or dot-com – have seen just as many freefalls as take-offs.
The investment community will likely become a victim of market overreaction in many cases, but it’s best to avoid putting commentary out into the market that might create an embarrassment for you down the road.
Comment Confidently, but Candidly
While it’s true investors will have spent more time analysing the impacts of AI than the majority of your audiences, the reality is that it’s nearly impossible to fully grasp the ramifications of AI or any fast-moving technological innovation. American computer scientist Eliezer Yudkowsky quite rightly once opined: “By far, the greatest danger of Artificial Intelligence is that people conclude too early that they understand it.”
This holds true in safeguarding society against AI’s potential negative consequences, but it also means one should be cautious in commenting overly definitively about something that has a relatively indeterminate horizon.
We would advise clients to be open and candid about the excitement AI innovation brings, but that we don’t know its upper limits quite yet. That can feel quite uncomfortable for some, but audiences will appreciate the sincerity and assign a level of authority to that confident forthrightness.
These small tips will help guide you to a thought leadership platform on AI that engages and informs, but steers clear of the overconfidence that caused many firms reputational damage in previous innovation eras.