While the global pandemic continues to put pressure on the economy, and venture capital is one area starting to succumb to the overall slump, interest and investment in artificial intelligence continues to be strong. On a recent AI Today podcast, Doba Parushev of Edison Partners shared his insights on how AI investment is particularly strong in the area of enterprise software.
Doba Parushev, Edison Partners
Doba is Vice President at Edison Partners, a 30+ year old venture capital firm focusing on growth-stage companies in the fintech, healthcare IT, and enterprise solutions spaces with over 200 companies currently in their portfolio. Doba’s focus at the firm is on enterprise software investments. Most of the portfolio companies have a product that is already well-developed and billions are often developed in each company. As part of this growth, Edison invests in a range of AI applications to specific areas.
From Doba’s perspective, unlike other technologies or solutions that are either too far in the future from adoption or too niche-focused, AI has current and broad applicability to a wide range of needs. It’s not a single technology or solution any more than “mobile” or “internet” is a single solution area. As such, it represented a broad transformational area that has broad industry impact.
Why don’t venture capital companies invest in fundamental AI research?
Some wonder why venture capital companies don’t invest in more fundamental AI research. Doba states that it is not really the role of VCs to invest in fundamental research. Rather, this sort of research is typically done by governments, universities, and large-scale companies like Google, Facebook, Amazon, and others who have R&D budgets to invest in more far-reaching, “moonshot” type activities. This research does not fund those who are actually making the products after the research, and that is where venture capital comes in. Research fund ideas. Venture capital funds businesses.
As a result, the portfolios at Edison typically include real life applications of AI to current-day problems such as cybersecurity and banking. A specific company that Doba mentions they are invested in is MoneyLion. MoneyLion is an AI-enabled system that is able to see across all financial institutions and help to optimize financial state. It works to predict all regular transactions using history. MoneyLion is capable of warning users when they might overdraft or bounce a check within a few months. Those who use MoneyLion typically have a better credit score and more stable financial future.
AI is also used at MoneyLion to help their customer service department better determine a customer’s need when they call in. The AI allows the people on the phone to better direct calls. Most customers never know that this technology is backing the customer service experience and think that it is magic. According to Doba this has actually increased the customer satisfaction scores of their customer service department.
In May 2018, Doba was a panelist at Cognilytica's AI investment forum. His role was to talk about the current state of the AI-centered business investment. Doba mentioned that at the investment forum, he heard a lot of great ideas, the diversity of which surprised him in terms of the different ways in which AI is being applied. As a result, he says that now is a great time to invest in AI with the emphasis that you need to be smart with your investments.
However, the downside to such intense interest in AI is that too many people are using AI as a keyword to get investment, whether they truly use AI or not. Some of the questions that Doba asks potential companies they want to invest in are:
- What problem is your product solving?
- Why is AI the best solution over other solutions?
- What AI architecture are you using?
- Why do you think it is better and less expensive to use AI or machine learning over other options?
One of the core requirements for being a venture capitalist Doba says is not to be the smartest person in the room. Instead, he says that it is important to be someone who can learn quickly. That means to be able to listen to pitches and be able to determine what a person is describing.
The downsides to AI
Many have said that the broad adoption of artificial intelligence will kill jobs. According to Doba, AI will kill jobs in a way. It will kill specific jobs but it will also open jobs in new and emerging areas to work alongside AI. AI is great but it can’t work alone. AI is better, faster, and cheaper than humans at performing many types of tasks. However the use of AI will also create jobs for building AI and then also to facilitate the AI’s process. He says that we may even have more jobs created than those that are cancelled out by AI. Doba says that it may be hard to go through this transition though, and we will need to adapt to the changes brought about from adoption of AI. It is important to note that Doba says this comes from a gut feeling, not any part of his professional experience.
But this shift in jobs is not something that is going to happen just yet. AI is currently more expensive or slower than human alternatives. Before these changes happen, AI needs to further streamline and become less expensive.
We all know that artificial intelligence is a growing area. That is part of the reason there is so much investment and research going into the field. In wrapping up the podcast interview, Doba talked about how businesses that develop AI are going to continue to grow even in times of economic turmoil. The role of the investment ecosystem is critical to AI’s long term growth. As they invest in real-world solutions that solve real-world problems, they help to prevent AI winters and to generate momentum in the industry.
