24 Oct 2023

Why invest in AI and Machine Learning startups?

Artificial intelligence (AI) and machine learning have ushered in an era of unprecedented innovation. These technologies promise to reshape industries, redefine customer experiences, and bring about transformative changes in the way we live and work.

With the ever-evolving landscape of AI, the importance in investing in startups on the cutting-edge of this field is becoming increasingly apparent. We discussed this with Stephan Wirries, Partner at Ventech, early-backer of unicorns like Vestiaire Collective and Believe as a pan-European VC.

Innovation and return on investment

Stephan Wirries sheds light on areas within AI and machine learning that hold potential for significant innovation and returns. He highlights that "advances in Large Language Models (LLMs) hold great promise, benefiting various AI domains like robotics, imagery, video, and audio." By giving machines a deeper understanding – say, allowing them to recognise a hammer and then using that knowledge contextually – we enhance their human-like capabilities.

One of the profound impacts of these models, according to Wirries, is in transforming sectors like content creation and customer service. While current challenges lie in ensuring the factual accuracy of these models, overcoming these barriers could open doors to a range of applications, "from refining search algorithms to transforming healthcare diagnostics and business intelligence."

The untapped potential of unstructured data is also a game-changer. Wirries captures the essence of its significance, noting that "the ability to access, interpret, and utilise such data on a massive scale will be nothing short of a revolution for businesses." Imagining an AI assistant that can process and make sense of all your emails offers just a glimpse into this transformative potential.

Responsible AI: Trust and transparency

Investing in startups is not just about foreseeing financial returns. It is also about ensuring that these startups adhere to responsible AI practices. 

For Wirries and Ventech, trust is paramount. "Evaluating responsible AI practices is a multi-layered process," he explains. For Ventech, promoting algorithm transparency, ensuring secure data handling, and abiding by key regulations like the GDPR are non-negotiable standards.

Navigating regulatory challenges

The regulatory realm for AI, especially in Europe, is still evolving. However, rather than viewing regulations as mere hurdles, Wirries believes they can also be opportunities. As an illustration, he mentions a company in Ventech's portfolio, Prewave, which leverages AI not just for supply chain risk monitoring but also to help clients comply with specific regulations, such as the German Supply Chain Law ("Lieferkettengesetz").

Emerging opportunities

Looking ahead, Wirries envisions numerous possibilities for AI and machine learning startups. 

"Many of today's more unstructured business processes are multi-billion dollar opportunities," he states. The near future might see the transformation of tasks that once demanded extensive manual effort, replaced by streamlined software solutions. Personal assistants will become sharper, digital technologies will be more user-friendly, and generative AI will reshape creativity.

As the AI landscape continues to evolve, it is important for the industry to consider insights from experts like Stephan Wirries. Investing in AI and machine learning startups is not just about capitalising on the next big thing, it is about being part of a transformative journey that promises to redefine industries, revolutionise customer experiences, and make the world a smarter place. 

Partner at Ventech and a software engineer at heart, Stephan is a cross-border VC stellar player and is passionate about companies that leverage technology to solve complex problems with significant commercial potential. You can follow Stephan here.

until IFA 2024! Buy your ticket now