New kids on the block striving for funding – Artificial intelligence startups
Visiting my first professional conference
As a Summerpreneur with The Pirates Hub @Swisscom I work at the interface between startups and the big blue corporation trying to connect the best of both worlds. During this internship I had the chance to attend my first international business conference: The 15. SECA Private Equity & Corporate Finance Conference which took place on the 6th of July at the SIX Convention point in Zurich.
From my outside perspective, I perceived that the participants of this conference are moving along in a vivid exchange and follow their own rules and beliefs. Entrepreneurial energy hits the calm rationality of venture capitalists and above that legal advisors are trying to sort out difficult ownership structures and find an acceptable solution for the founder and the investor. I listened to spontaneous pitches of startups, heard different reasons for investing also small amounts in private equity and learned about deal flow and due diligence procedures of established venture capitalists.
Progress and trends in artificial intelligence
In the specialized track about artificial intelligence, focussing on Switzerland, Klaus-Christian Glueckert from Creathor Venture introduced the topic with a lively presentation about the technology. He differentiated between supervised and unsupervised learning, a system which improves by playing against itself and motivated to think around the corner by showing an example, where the visible routes of oil tankers were used to compute predictions about the global oil market.
Jürgen Galler, former Chief Strategy Officer of Swisscom, presented his own startup 1plusX, which uses machine learning techniques on customer data to obtain the best and most personalized advertising results by e.g. automated layouting of web shops. Manish Singhal, founding partner at pi Ventures, commented on the rise of AI in India. He pointed out that most of the worlds data scientists come from India and that today they are increasingly returning to their home country and found own companies because of rich government funds for startups.
From market trends to investment decision making
As the capital markets have changed radically in recent years and low or even negative interest rates are being realized on certain asset classes, (private) investors start to focus on private equity, e.g. by investing in a venture capital fund. This asset class was mainly popular in the US, since there is a huge unified English-speaking market, but gained popularity in Europe and Asia. Managers of such funds are confronted with the extremely difficult task of evaluating the business model, market potential, exit options and the teams of various startups at the same time for the chase after unicorns, while their population is projected to be decreasing.
This dilemma was demonstrated with strong rhetorics by Mukund Mohan, former head of Microsoft Ventures and founder of the seed stage startup fund Napkin Stage: „If a monkey tries to hit the unicorn on a darts board, he does this more accurately than 99% of all human investors.“ In order to cut through this sheer randomness he follows the approach of data driven micro-investing (∼50k) in syndicate investment vehicles. In order to make the right decisions his fund has built up a global dataset of startup data and calculates complex models to predict the success rate of an investment. It was a pleasure to meet Mukund for a coffee and be inspired by his knowledge as well as by his down-to-earth personality.
David Brown – „Business Angel of the Year“
The SECA, the representative body for Switzerlands private equity, annually awards a prize to the angel investor of Switzerland with the highest visibility and the biggest contribution to the development of innovative Swiss startups. This year the title went to David Brown, who gave some valuable insights about the industry and his vita live on stage:
- He started as an engineer, founded and sold a startup and became business angel (the „typical“ path).
- He doesn’t see himself as an investor per se, because in the seed stage there are few success indicators and exit options are not predictable.
- He tends to invest in high-risk technology (complex and not yet mature) rather than in high-risk markets (competitors and market barriers).
- He invested in about 30 startups since 2008 and made his first few investments with the Swiss angel investors group GoBeyond.
For further and more detailed statements of Dave Brown after the conference I can highly recommend this interview from startupticker.ch.
An internationally cross-linked microcosm
Suzi LeVine, the U.S. Ambassador to Switzerland and Liechtenstein, showed in a fiery speech how entrepreneurship can be fostered by government initiatives and dropped impressive numbers of FDI to emphasize the close relationship between Switzerland and the United States. It was impressive, how broad the network of private equity and corporate finance is stretched around the globe and I would be happy to meet the participants again at the next conference.