No Result
View All Result
  • Private Data
  • Membership options
  • Login
  • COUNTRY
    • ITALY
    • IBERIA
    • FRANCE
    • UK&IRELAND
    • BENELUX
    • DACH
    • SCANDINAVIA&BALTICS
  • PRIVATE EQUITY
  • VENTURE CAPITAL
  • PRIVATE DEBT
  • DISTRESSED ASSETS
  • REAL ESTATE
  • FINTECH
  • GREEN
  • PREMIUM
    • ItaHubHOT
      • ItaHub Legal
      • ItaHub Tax
      • ItaHub Trend
    • REPORT
    • INSIGHT VIEW
    • Private Data
Subscribe
  • COUNTRY
    • ITALY
    • IBERIA
    • FRANCE
    • UK&IRELAND
    • BENELUX
    • DACH
    • SCANDINAVIA&BALTICS
  • PRIVATE EQUITY
  • VENTURE CAPITAL
  • PRIVATE DEBT
  • DISTRESSED ASSETS
  • REAL ESTATE
  • FINTECH
  • GREEN
  • PREMIUM
    • ItaHubHOT
      • ItaHub Legal
      • ItaHub Tax
      • ItaHub Trend
    • REPORT
    • INSIGHT VIEW
    • Private Data
Home GREEN

Where VCs are placing their next AI bets

Siftedby Sifted
August 26, 2024
Reading Time: 8 mins read
in GREEN, PRIVATE EQUITY, UK&IRELAND, VENTURE CAPITAL
Share on FacebookShare on Twitter

This article first appeared in Sifted’s Up Round newsletter, sign up here.

The time has come — as it does with every investment hype cycle — for VCs to start wondering whether the billions they’ve poured into AI over the past two years will ever pay off.

Companies which raised big earlier in the AI boom will soon need to raise funding again — and VCs are having a good think about what metrics they’ll need to see to merit further investment.

“The valuations are high, some of the companies have fantastic traditional sales and revenue metrics, but you don’t know necessarily how much of that is experimentation on the part of customers, how much of it is really real and going to retain and some of the companies don’t have any metrics,” Suranga Chandratillake, general partner at Balderton Capital, recently told me. 

Advertisement

It’s easy to be dazzled by big annual recurring revenue figures, says Francesco Ricciuti, an associate at Runa Capital, who’s focused on deeptech — even though customers might not be sticking around. “We saw companies getting to $1m in revenues in less than a year, which is unseen for SaaS companies, right?” he tells me. “If anything, you need to be more diligent, because that’s a shiny number that could sort of get into your brain, and you would not see many worrying things like high churn, high customer acquisition costs.”

“People are just facing the truth that many of these applications were not needed or not ready to scale,” adds Ricciuti.

So, where are VCs placing their next AI bets?

Back to basics

Michael Treskow, partner at London-based VC firm Eight Roads, says his AI strategy is about, well, not AI. “The ultimate question for us is, ‘Do customers like the product?’” he tells me. “Hopefully most of us are a bit more nuanced in how [we] evaluate this than just to say, ‘Oh, okay, you have AI, check the box.’”

Ricciuti puts it another way: Red flag: if they brand themselves as an AI startup; Green flag: if they don’t. 

Of course, AI needs infrastructure. Ricciuti thinks the boom in data centres opens up plenty of opportunities to make money from hardware — things like liquid cooling or providing energy for the data centres. Within software, he says Runa’s looking for “all the old SaaS metrics,” like customer acquisition cost, lifetime value of your customers, churn, the health of customer acquisition and margin.

He’s especially excited by AI in robotics and autonomous vehicle applications — like UK AV startup Wayve’s use of end-to-end AI (a method where the model learns the steps of a function from start to finish). “Maybe that’s what we needed to see these technologies finally come to the real world,” he says.

Treskow says he’s avoiding companies that are essentially building their business around OpenAI’s API.

Instead, he’s looking for companies in heavily regulated industries where you can’t just use ChatGPT — or “any vertical that has a proprietary set of data that is not obviously publicly available.”

He’s also interested in financial services and healthcare — highly regulated industries where “you need to understand where the data comes from”. “It needs to be dealt with in a compliant manner….That creates added layers of complexity that probably justify a separate product,” he says.

Treskow points out that we’re moving more towards AI agents that aren’t just answering questions for you anymore, but performing tasks based on information. “For that to be possible, you need integrations into systems,” and “healthcare is an interesting one for that, where you have your electronic health record systems; you need an integration with that, the data needs to be HIPAA compliant,” he says, referring to health records privacy laws in the US.

Advertisement

“That’s at least as a starting point for saying, ‘Okay, you can see a world where this is not just going to be consumed by a large language model,’” he adds.

As for what we’re not going to see so much anymore? “Many of these big rounds that we’ve seen are not replicable; there’s a bunch of people that wanted to get early into these companies because they believe these companies would do the Mistral-like path — raise every six months at increasing valuations. And if you enter that seed in Mistral now, you could sell secondaries after a couple of years and get a nice, fat profit. That’s a strategy; you don’t need to wait for an IPO, right? But I think it’s increasingly hard to find now. Many of these things have already happened,” says Ricciuti.

I’d love to hear from you, VCs: what’s your strategy for investing in AI right now? Send me a note.

This article first appeared in Sifted’s Up Round newsletter. Want more stories like this? Sign up here.

Read the orginal article: https://sifted.eu/articles/vc-ai-trends-investment/

Gateways to Italy

Gateways to Italy – Offer your services to funds and investors willing to explore opportunities in Italy. Become a partner!

Gateways to Italy – Offer your services to funds and investors willing to explore opportunities in Italy. Become a partner!

by Partner
June 6, 2023

Sign up to our newsletter

SIGN UP

Related Posts

DACH

NTT to launch and list data center REIT in Singapore

May 9, 2025
SCANDINAVIA&BALTICS

Northvolt founder Peter Carlsson joins new AI startup

May 9, 2025
FRANCE

Alice & Bob to build $50m quantum computing lab in Paris

May 9, 2025

ItaHub

Crypto-assets supervision rules in Italy, Banca d’Italia will supervise payment systems and Consob on market abuse

Crypto-assets supervision rules in Italy, Banca d’Italia will supervise payment systems and Consob on market abuse

November 4, 2024
Italy’s SMEs export toward 260 bn euros in 2025

Italy’s SMEs export toward 260 bn euros in 2025

September 9, 2024
With two months to go before the NPL Directive, in Italy the securitization rebus is still to be unraveled

With two months to go before the NPL Directive, in Italy the securitization rebus is still to be unraveled

April 23, 2024
EU’s AI Act, like previous rules on technology,  looks more defensive than investment-oriented

EU’s AI Act, like previous rules on technology, looks more defensive than investment-oriented

January 9, 2024

Co-sponsor

Premium

Funds vying for management consulting firm BIP, a CVC portfolio company. All deals in the sector

Funds vying for management consulting firm BIP, a CVC portfolio company. All deals in the sector

March 6, 2025
Private equity, Italy 2024 closes with 588 deals as for investments and divestments from 549 in 2023. Here is the new BeBeez’s report

Private equity, Italy 2024 closes with 588 deals as for investments and divestments from 549 in 2023. Here is the new BeBeez’s report

February 10, 2025
Crypto-assets supervision rules in Italy, Banca d’Italia will supervise payment systems and Consob on market abuse

Crypto-assets supervision rules in Italy, Banca d’Italia will supervise payment systems and Consob on market abuse

November 4, 2024
Venture capital investments top €1.3bn in 208 rounds as of Sep30  in Italy. They were €1.5 in all 2023. The new BeBeez Report

Venture capital investments top €1.3bn in 208 rounds as of Sep30 in Italy. They were €1.5 in all 2023. The new BeBeez Report

October 28, 2024
Next Post
Italy’s private equity weekly roundup. News from TIM, CDP Equity, Macquarie Infrastructure and Real Assets, KKR, Golden Goose, Permira, Carlyle, Gruppo Florence, and more

Italy’s private equity weekly roundup. News from Di Luccia & Partners, TIM, Ardian, Crédit Agricole Assurance, Vodafone, INWIT, Unieuro, Fnac Darty, Investindustrial, La Doria, and more

London-based Sunswap secures over €20 million aiming to decarbonise cold chain logistics

EdiBeez srl

C.so Italia 22 - 20122 - Milano
C.F. | P.IVA 09375120962
Aut. Trib. Milano n. 102
del 3 aprile 2013

COUNTRY

Italy
Iberia
France
UK&Ireland
Benelux
DACH
Scandinavia&Baltics

CATEGORY

Private Equity
Venture Capital
Private Debt
Distressed Assets
Real Estate
Fintech
Green

PREMIUM

ItaHUB
Legal
Tax
Trend
Report
Insight view

WHO WE ARE

About Us
Media Partnerships
Contact

INFORMATION

Privacy Policy
Terms&Conditions
Cookie Police

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • COUNTRY
    • ITALY
    • IBERIA
    • FRANCE
    • UK&IRELAND
    • BENELUX
    • DACH
    • SCANDINAVIA&BALTICS
  • PRIVATE EQUITY
  • VENTURE CAPITAL
  • PRIVATE DEBT
  • DISTRESSED ASSETS
  • REAL ESTATE
  • FINTECH
  • GREEN
  • PREMIUM
    • ItaHub
      • ItaHub Legal
      • ItaHub Tax
      • ItaHub Trend
    • REPORT
    • INSIGHT VIEW
    • Private Data
Subscribe
  • Login
  • Cart