EUVC #224 Roundtable on Impact of AI on VC with Claude Ritter, Fred Destin, Andre Retterath and Ekaterina Almasque
Sep 26, 2023
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In this roundtable discussion on the impact of AI on VC, top European investors explore the real secrets behind the transformation of the VC landscape. Topics include the biggest venture opportunities in AI, AI's influence on incumbents vs. startups, strategies to avoid hype cycles, and the societal impact of AI.
AI is a foundational enabling technology with wide-ranging applications across industries and sectors.
Startups in the AI space need substantial differentiation and should not rely on thin applications of AI.
Venture capitalists need to be cautious, embrace experimentation, and provide more growth capital for companies in later stages of development.
Deep dives
AI as a Foundational Technology
AI is not a vertical but a foundational enabling technology that is being applied across multiple industries and sectors. From protein folding to designing homes, AI has a wide range of applications and is driving innovation in various fields.
Value Creation in AI
Value creation in AI occurs at various layers, including the infrastructure layer, the application layer, and the middle layer that reduces friction. Startups can differentiate themselves by attacking an entire workflow, going vertical in a specific industry, or developing specialist tools in the enterprise space. However, it is important for startups to have substantial differentiation and not just rely on thin applications of AI to existing products.
Challenges and Opportunities in AI Investing
Venture capitalists need to navigate the rapidly evolving AI landscape. While there are exciting opportunities, it is essential to be cautious and not overpromise on forecasts or raise too much money too soon. It is also important to embrace experimentation and learning, as AI is a non-linear and chaotic field. Additionally, there is a need for more growth capital to support companies in the later stages of development.
The Challenge of Building a Real Leader in the Application Layer
Building a real leader in the application layer is challenging due to the difficulty in acquiring enough capital. Some companies, like Smetix, are attempting to rebuild the stack and create their own foundation models to differentiate themselves. Rebuilding the stack based on research from institutions like Dartmouth University allows these companies to provide unique solutions for specific markets, such as the German market with German language support.
The Impact of AI on Job Displacement and Value Distribution
AI is expected to have a significant impact on job displacement, potentially leading to riots in the short term. The race for differentiation becomes crucial, as the tech community tends to replicate quickly. The power law distribution in venture capital means that only a few companies will generate the majority of value, leading to a concentration in wealth. Reskilling and upskilling workers may not be enough to address the displacement issue, requiring proactive measures such as redistributing value to prevent the widening gap between the rich and the poor.
Today we bring you a roundtable on the impact of artificial intelligence on the wonderful world of venture capital. In this episode, we bring together a stellar panel of Europe's top investors to explore the real secrets of how AI is transforming the VC landscape.
In this episode, we focus on how AI is changing the way VCs invest. We chose to delve into the "how" rather than the "what" of AI in VC. We're here to uncover the real secret sauce that's driving change in the VC world. We won't waste your time with generic information you can find on the internet. Instead, we've gathered Europe's best investors to share their insights.Our agenda for today includes:
Where our panelists see the biggest venture opportunities in AI.
The debate on whether AI favors incumbents or startups.
Strategies to avoid getting caught up in hype cycles.
A philosophical discussion on AI's societal impact and how VCs should navigate it.
Enjoy!
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