Venture investors may tighten selection of early-stage AI companies — CNBC
Venture investors may become significantly more selective about investing in early-stage AI companies, as valuations in certain market segments are beginning to look excessive. CNBC reports, citing investment market participants.
Capital will become more selective
Jakub Nytra, founding partner of venture firm Purple Ventures, expects capital to become more selective over the next six to 12 months. According to him, investors will assess more carefully whether a technology creates real value rather than merely being a feature presented as a standalone business.
Nytra noted that not every company that mentions artificial intelligence in an investor presentation deserves an exceptionally high valuation. In his view, the winners will be companies that use AI to solve expensive and complex problems.
As an example, he cited TASS Vision, a company in Purple Ventures' portfolio. It uses edge artificial intelligence and cameras to analyze how shoppers move through physical stores and provides retailers with data to improve their operations.
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Productivity and revenue in focus
David Ng, co-founder and CEO of Arki Finance, said the key question for investors is whether AI applications and their users will be able to generate sufficient productivity, revenue, and cash flows to justify the investment.
The artificial intelligence boom is already reshaping markets: investors are putting money not only into Nvidia but also into other chipmakers and infrastructure companies, betting on the expansion of AI data centers. At the same time, concerns persist about a possible bubble amid major capital expenditures and high growth rates.
Shane Chesson, founding partner of asset management firm Openspace Capital, believes that even if the bubble bursts, it will primarily hurt those who invested out of fear of missing out. At the same time, in his assessment, the infrastructure created will continue to be used and may significantly transform the operations of many companies.
