VEECEE Roundtable: The impact of generative AI

Preceding the latest get-together of the VEECEE Community at Google Cloud in Amsterdam, investors had a roundtable discussion about the main topic of the event: Generative AI.

The session was moderated by Lisa Brouwer of Curiosity VC, an investor specialized in AI software. Joris Schoonis, MD of Google Cloud, Benelux opened the session. He told the present VC-investors that Google has been active in AI since 2016. “We are on the eve of a huge revolution, just like the rise of the internet and mobile”, he said. “And Google Cloud is investing hugely in AI-technology. Google Cloud’s business has tripled in the past years. We’re pioneering on a large scale. AI is our big bet for the near future.”

The major impact that Gen AI has at Google Cloud, is also felt by the investors present at the round table in their companies. It already plays a key role in almost every vertical the VC’s are active in. Not just technology and software development, but also amongst others healthcare, fintech, education and entertainment & media. A participant: “The biggest wins can be achieved in customer interactions. But this is a horizontal implementation. Every investor is now working on use cases within their verticals.”

Currently, the VC’s are busy to see how entrepreneurs can be supported to adapt the technology in their businesses. “Combining their internal knowledge with a rapidly changing outside world”, as one VC-investor put it.

“Usable applications, that’s where the money is to be made”, a VC-investor said. But in the rapidly changing landscape they are struggling with selecting propositions that have a longer lifespan. If a company has a head start, how long will they be able to keep it? “There are many examples of technologies with millions of lines of code that took years to program, that are now quickly being replaced”, according to a participant. “The number of lines of code that programmers can write has increased dramatically due to AI. Rebuilding a piece of software such as HubSpot is a lot faster and easier than a few years ago. How much will that increase be in a few years’ time?”

This statement underlies a challenge for VC. How do they prevent selecting a thesis only to find out three months later that they were completely wrong? There are no easy answers, but the main takeaway is: Focus very deeply on specific use cases within their verticals. How much faster and more efficient can this proposition make things, and how many potential users are there?

Several examples of such use cases are discussed. KYC (Know Your Customer) automation in the financial sector; a medical AI-application that can use someone’s genetic makeup to come to a diagnosis much quicker; Kittl, whose AI-powered design tools helps companies speed up workflows and gives them access to a ton of illustrations, fonts, photos, icons, and textures; marketing software Luna, that can automate your outbound efforts by drafting emails that can bypass all spam-filters; Earlybird, a company that is transforming employment support with voice-tech, and there are many more…

Gen AI is also changing the venture capitalists own work in selecting and evaluating propositions. “All the PDF’s we receive are entered into the AI, which uses pre-defined criteria and questions to filter out the bad pitch decks”, said a participant. “I am on 18 boards. The amount of information is staggering. Now the AI knows all my preferences and key criteria. I can even formulate replies for me in the suitable tone-of-voice. Let’s say I want to sound angry. The AI can do that, no problem.”

Many funds are currently setting up inhouse engineering teams to set this up for them, automate it, and improve the quality of the deal flow. This has a significant impact on the life and work of venture capitalists. “What you used to do with colleagues – getting smart, structured feedback, you now do with AI”, as one investment manager put it.

The biggest risk the participants see is the current lack of clarity in the sources the AI uses to generate responses. A lawyer of VEECEE-sponsor Houthoff, who was present at the round table, gave the example of a court case put forward by ChatGTP that never happened. “If you ask the chatbot: ‘did this really occur?’, it will reply: ‘yes, it did’. It appears to be very genuine. How do you separate what’s real from what is fabricated? That is currently a major challenge in the use of AI.”

This risk is acknowledged by Google’s Joris Schoonis. “Google Cloud is therefore paying a lot of attention to developing tools to help evaluate information generated by its AI-tools Bard (consumers) and Vertex AI (enterprise).”

In the development and implementation of AI, it is crucial that subject matter experts are deeply involved. “When AI gives me information about theoretical physics, I can’t tell if its reliable information. If it’s about an investment case, I can”, one VC-investor said. Other participants agree. Models should be tested and evaluated by top experts before being put to use.

So nobody is currently worried of being replaced by AI. But roles will change. One venture capitalist concluded: “You will get a co-pilot that can make you a hundred times more efficient. What are you going to do with the time that you now have left?”

This VEECEE Community event was sponsored by Google Cloud and Houthoff.

Google Cloud is committed to supporting VC’s in their mission to invest in and grow high-potential startups. Portfolio companies can use their cloud platform free of charge, through Google Cloud’s startup program. And even though they build their products for free with Google Cloud, they receive help from Google’s engineers. This is explained in this case study about one of Antler’s Amsterdam based portfolio companies.

Startup programma

https://cloud.google.com/startup

Case study

https://cloud.google.com/customers/peckish

 

Click here to view the photos of the VeeCee Community drinks. Hope to see you next time!

Click here to read the report of the plenary session