Thread by @BiIndia

.@Gartner_inc predicts 75% of VCs will be using AI instead of their ‘gut feel’ to make decisions by 2025 — a path that companies are already discovering

businessinsider.in/tech/enterpris…

By @pabsgill

@Gartner_inc @pabsgill Global research firm @Gartner_inc predicts that 75% of venture capitalists and private equity investors will use #ArtificialIntelligence (AI) to make their investment decisions by 2025.

@Gartner_inc @pabsgill “This ‘impossible to quantify inner voice’ grown from personal experience is decreasingly playing a role in investment decision making,” said Patrick Stakenas, a senior research director at @Gartner_inc.

#ArtificialIntelligence

@Gartner_inc @pabsgill “The traditional pitch experience will significantly shift by 2025 as VC and private equity (PE) investors turn to leveraging AI and data science insights for due diligence.”

#ArtificialIntelligence

The wheels of this transformation are already in motion. Stock markets around the world have opened their doors to AI-led funds, called ‘quant’ funds and startups like Motherbrain and SignalFire are applying data to venture capital around the world.

#ArtificialIntelligence

Rather than have fund managers at the helm, quant funds use rule-based algorithms to pick the winners and losers. In India, one such example is the #TataQuantFund.

#ArtificialIntelligence

It claims it can beat the market using AI to cut out human bias. But, there is still a fund manager in-charge to keep an eye out for any mistakes.

#ArtificialIntelligence

The Project One hedge fund, on the other hand, is a ‘pure’ AI model. The brainchild of Andrew Sobko and Rami Jachi uses an alpha-learning AI model that continues to adapt & update itself without human involvement for manual data collection and processing.

#ArtificialIntelligence

Between 2016 to 2019, the aggregate return of AI-led hedge funds in Europe was almost three times higher than overall hedge fund returns, according to US-based research firm Cerulli.

#ArtificialIntelligence

Around 90% of startups in India fail within the first five years of their inception, according the IBM Institute of Business Value and Oxford Economics. That’s enough to give investors pause when mulling over whether or not to invest in a new business.

#ArtificialIntelligence

That’s where AI comes in. It can allow investors to determine how early stage startups will perform. They can estimate the probability of a startup’s success by analysing its revenue growth, market size, industry experience and other pertinent factors.

#ArtificialIntelligence

This way, models using AI can predict if a #startup is investment worth before the fundraising process even begins.

#ArtificialIntelligence