Thematically, panelists who spoke at IPEM’s Venture & Growth Summit outlined numerous areas of interest. These included investments in companies spanning supply chain software, regtech, ESG/compliance software, healthtech, and cleantech. While VC investors are paying close attention to generative AI, there is a degree of caution. This is largely due to the pace of innovation, with LLMs potentially becoming obsolete just months after their release, making it hard for investors to see where the monetization opportunities are at present. Expectations are that the GenAI application layer could well allow viable business models to be built, but there are still a lot of risks to consider, as VC firms seek out which companies to back.
Unsurprisingly, the AI theme was an important aspect of this year’s Venture & Growth Summit, where experts explored the impact of AI on portfolio companies, how to leverage proprietary AI tools for market analysis, screening, and enhancing value post-investment, and the significance of AI in sectors like cybersecurity. Gartner forecasts the AI software market will grow at a 19.1% compound annual growth rate in the next six years, with $297 billion in global spending expected by 2027.
Leading European growth investors like Eurazeo have backed 45 companies at the growth stage, 30 of which are the top unicorns in Europe. The team are using AI models internally to enhance the investment process, from screening large unstructured data sets, to due diligence, through to post-investment and ways to add value. As investors use these AI tools, this data-driven approach is allowing them greater capabilities to benchmark company performance in terms of marketing efficiency, financial efficiency, growth efficiency etc.
It was also noted during the summit that multi-stage VC firms such as Forgepoint Capital are using AI tools to create proprietary market mapping. Specifically, GenAI-based query engines that aggregate deal sources (beyond traditional market research), as they seek out next generation companies best equipped to redefine and transform the market in cyber and AI.
AI presents a lot of opportunities for companies to improve their value proposition, whether this relates to cost reduction, enhanced customer service, more productivity. Moreso than seed and early-stage, growth stage companies who have built traction over several years, and who sit on proprietary data assets, will be well placed to leverage those assets with LLMs – effectively training LLMs internally to find additional growth revenue opportunities, while at the same keeping the data more secure, compared to public LLMs. Indeed, data governance and security were highlighted as important considerations among VC investors.
