News & Insights
Fast Growth Funding: A Guide To AI-Led Investing
By Guy Remond with Neil Vose
For anyone who’s been paying attention to the current tech climate, it’s obvious that AI is booming. There are over 3,000 UK AI startups, more than anywhere in Europe, and the average funding for these startups has gone up by 66 per cent since 2021.
However, this new wave also means that the world of AI has gotten very noisy. So, how can investors cut through the hype?
We just launched the pilot episode of our new podcast series, Fast Growth Funding. This series feeds into our new focus at EHE – demystifying AI investing. Helping you vet opportunities so you can enjoy the journey of investing in fast-growth, AI-driven ventures.
This blog will explain what this mission really means, why it’s so important to us, and provide some insights into how you can back the right ventures as an AI investor.
Leading the future of tech innovation
Since its inception, EHE has worked with multiple startups and early-stage tech businesses, priming them for investment and putting them in front of our network of investors. Our specialist engineering company, thestartupfactory.tech (TSF) works with these startups to build their tech company.
This means that over the years, we’ve acquired a high degree of unique technical expertise and experience. At the moment, we’re working with quite a number of exciting AI-led companies, some of which might require further funding down the line.
So, we did a thing. We decided to build a fund to help them scale quickly and give investors an opportunity to lead the current tech revolution.
In our trailer episode, I was joined by Neil Vose, our portfolio manager (listen to us chatting on the podcast). Neil clearly defined why investors need to key into this new AI wave and how not to get “caught out” by the hype cycle.
Neil: “It’s a really exciting time to be both an AI entrepreneur and an investor, in the current tech landscape. It’s quite clear that AI is here to stay – it’s not a fad. It has a massive impact on lives, businesses and new business models.
This means that it also requires a bit of circumspection in terms of backing the right AI winners.
One of the benefits investors will gain from our fund is that we’ve combined three key elements. A narrow focus on AI applications within traditional businesses, technical due diligence and the operational experience we have. With these key factors, we’re able to provide quite a reasonable and pragmatic assessment of these AI-led opportunities and identify the real winners.”
The challenges of AI investing
As Neil pointed out, every new piece of technology comes with an incredible amount of “hype”. We’ve seen this play out in the past with crypto and NFTs.
Usually, the inclination for investors is to pour huge sums of money into some of these (in my opinion) overinflated valuations. After all, they’re new, shiny, and most people think that there’s money to be had.
But after the initial excitement dies down, the market crashes before it eventually normalises. This means that anyone who invested their money before the crash ends up losing most – if not all of it.
Although there will probably be no massive crash with AI since it’s already embedded in our lives, investors still need to walk into this new wave with their eyes wide open.
AI isn’t a silver bullet. Rather than investing just for the sake of it, it’s important to sift the wheat from the chaff. Look out for real innovation – products that will increase efficiency and genuinely impact the world.
The technical expertise the TSF team brings to the table – as well as our commercial expertise – is so important because it helps us understand what represents genuine technology and innovation, as opposed to just technology for the sake of it.
This means that we can properly vet these opportunities and make smart, profitable investment decisions – which is the ultimate goal.
Looking out for potential
We usually vet every investment against certain metrics (look out for our next blog on this). We start by looking at the team. What’s their background? Do they truly have the level of experience that they claim to have?
There’s a certain amount of technical due diligence required at this level because the team needs to have the necessary skills to carry out the vision. Knowing what to look out for – and having the technical expertise needed to do so – will certainly stand you in good stead as an investor.
The bottom line
The world of AI investments is incredibly messy and complicated. That’s why it’s essential that you step in with full transparency and understanding around some of the key areas.
If you’d like to get a clear roadmap of your investment strategy and what it takes to back the right opportunities, subscribe to our podcast, Fast Growth Funding.
You can also register your interest in our EIS-qualified fund for UK-based AI investments and be the first to know when it launches.
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As well as investing in and mentoring businesses, we’re creating a community of entrepreneurs, investors and technology enthusiasts.Become part of the EHE community and benefit from:
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- Podcast interviews with seasoned entrepreneurs and investors
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- Ask questions to our expert Investor Panel