For any non-technical investor, the term Artificial Intelligence or AI can either be a celebration or gloom. Celebration in a way because adding a few AI startups to their investment portfolio establishes their deal flow smoothness as justified in the eyes of their lending partners. Gloomy in the sense that almost every startup uses the same terms and prospects to increase their value. The artificial intelligence seed investment is more than just an exchange of money; they need to mentor the entrepreneurs, make introductions, and do anything to make their portfolio company a success. This makes money and technical knowledge about the industry essential for the successful investment procedure. But before you reach an agreement with any startup, meet the team doing the work and speak with them. Ask them some questions to get a vibe for how they conduct their operations.
As an investor, you need to ask some key questions before reaching any investment decision.
Q1: Who are the founding members and their technical background?
Those startups that have multiple co-founders tend to be more successful and strong as compared to the ones with solo entrepreneurs. As an AI seed investor, you need to make sure that at least one of them has the technological expertise and has a proven record present. In simple terms, invest in people that already have the necessary AI expertise to help them meet their goals.
Q2: Do you have domain expertise?
Assume a system developed by a startup that monitors trading history, learns from your approach in the market, and then executes trades on your behalf. For this system to succeed, a market expert needs to work alongside the AI. As an AI seed investor, you need to make sure that the domain and technical experts positively feed each other. Whatever niche the system touches, an appropriate industry expert supports the team and keep the expectations in check.
Q3: Does your solution use AI?
It happens too many times that a startup has data that they term as “Artificial Intelligence,” but in actual it is not. As an investor for artificial intelligence seed, you need to have the technical knowledge to ascertain that the so-called “AI System” actually has AI incorporated or not. If yes, then it is alright to proceed but if not, that is just conventional computer programming and not what you look for at the moment. Make sure that the startup reaching out to you does have AI system or is just a misleading hype to invoke the AI and machine learning aspects carelessly.
Q4: How close your customers are to you?
There is nothing more appealing and pleasing for an AI seed investor to see that the startup has a deep understanding and reach with the customers. Customers are the entities that provide necessary revenue to carry the business throughout the quarter and are mainly the reason a company exists. Observe how the sartup treats and serve a customer. Failure to consider a customer means a misstep that ultimately loses the attention of an investor. Look for startups that have the best understanding and knowledge about handling customers the right way.
Q5: What is the source of data?
Data is the heart and soul of an AI technology and has to be as pure as possible. But in reality, things get messy and imperfect and that is why, as an investor, you have to value such startups that keep their data pipelines smooth. If in a startup, people gather and cleanse data, then it is a problem. The idea here is to scale the process on larger automated terms to get bigger and better. The company never reaches its full potential if people play a role in gathering data.
Q6: Are you just in for money or looking for mentorship also?
As an AI seed investor who has technical knowledge about the industry, your job is to make sure that the startup receives necessary mentorship to level the playing field with its competitors. Stay aware of any startups that fail to give you the necessary answers regarding the potential mentorship. You are not here to make financial transactions but also to help bring out the next generation of possible technology gurus.
All the questions, as mentioned above, will give you a general idea regarding the potential that a startup has in terms of growth and vision. Investing in such startups that fail to provide you with positive answers to these questions tend to create a red flag regarding investment proposals. As an artificial intelligence seed investor, you need to make sure that the startups answer some or all of the questions satisfyingly to help expand your investment portfolio and bring out the next generation of AI-based problem solvers.