This browser is not actively supported anymore. For the best passle experience, we strongly recommend you upgrade your browser.

Our Take on AI

| less than a minute read

Questions to ask before investing in AI

It is not a far leap to predict that soon enough, to borrow the phrase, all companies will be AI companies.

But many investors have gotten lost in the hype.  They may place bets on the 2000-style pets.com company (which ended in an IPO to liquidation in <1 year), thinking they are a 2019 chewy.com or better.

Just like with the early internet, diligence will be much harder for investors without meaningful AI expertise and who do not surround themselves with advisors with meaningful AI experience.  (If you need help, let's talk.)

But even with the best legal and technology advisors, investors must still remember to approach AI investments with the same sound business diligence practices they would any other investment.  Key business questions raised in evaluating AI investments include those tried and true: market opportunity, product-market fit, moat/defensibility and go-to-market execution strategy.

In the summer of 1999, the Economist published a special report on “The Net Imperative”. It led with a bold prediction from Intel’s chairman: In five years' time, all companies will be Internet companies, or they won't be companies at all. This would have sounded like hubris during the ensuing dotcom collapse, but it ultimately came true. A massive platform shift took place – and now the default state is to be an “Internet company”, whether you’re selling books, handling payments, or running taxis. Fast forward, and generative AI is emerging as a shift of similar scale.

Tags

due diligence, investment, m&a