Why aren’t all VCs ready to adopt AI-powered investment tools?


The strength of AI lies in its predictive prowess. Fed with enough data, according to conventional thinking, a machine learning algorithm can predict just about anything – for example, which word will appear next in a sentence. Given this potential, it’s no surprise that enterprising investment firms have sought to leverage AI to inform their decision-making.

There is certainly plenty of data one could use to train an AI-powered due diligence or investment recommendation tool, including sources like LinkedIn, PitchBook, Crunchbase, Owler, and other marketplaces. third-party data. Thanks to it, AI-powered financial research platforms claim to be able to predict a startup’s ability to attract investment, and there might be some truth to that. A study of hedge fund performance found that AI-driven funds generated higher average monthly returns over a 15-year period than their human-driven counterparts.

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