AI Startups: A VC Perspective

[Music] apologies apologies so good afternoon everyone my name is Gabriel en zerin I'm a financial regulator here at 0 GM um you were very lucky to see my big boss right before me so I will pale in comparison but I promise you we will have a very good panel session so our discussion is AI startups a VC perspective um there's a lot to unpack here um I'm absolutely thrilled to have my guests here so obviously we have special welcome to sarale from outliers VC hello hi K we have Sandy bakim from proess Ventures and John Abbott from Bullpen incubated by emerge 9 now I'm going to ask each and every one of my panelists to just quickly introduce themselves um for the VC's here I'd like you to tell us a little bit about what you're investing in um ticket size geography Etc so we know exactly your perspective and then obviously for John tell us a little bit of Bullpen and what you're up to go amazing it's very good to be here and good to see everyone so my name is s um I'm a GP at outliers Venture Capital we're an early stage Venture Capital firm uh with investments in Saudi the UAE Egypt but we cover all of mina um and yeah that's uh that's what we do um I'm sui bakshi I look after European and us uh invest ments for process Ventures process we're the largest listed tech company in Europe we've got about a hundred billion do market cap we're Global Investors um we invest checks as small as a million dollars to as large as a couple hundred million dollars sweet spot for us is 10 to 50 um and we also have presence here in the region and it's great to be back here thanks John yes thank you uh my name is John Abbott I'm the CEO and co-founder of Emer 9 Emer 9 is a private Equity Marketplace and we started building some internal AI tools to facilitate due diligence and investment report Drafting and we then decided to offer those tools uh to third parties under the bullpen brand very nice thank you so I'm going to kick this off and we don't have much time but very quickly to talk a little bit about about are you guys from the VC perspective are you investing in AI startups yes no is it you know is it focus a big Focus not a focus at all um I can start so for us we cover Mina uh and I think uh AI is emerging globally but in Mina specifically as well uh the question of whether we invest in AI companies I would say every company is or can be an AI company so maybe you sound you sound like you know the banks that say oh we're not Banks we're fexs really just really old fexs I'm just teasing you um yeah so the way that we think about the world is and it's interesting so we invest in AI native companies we invest in generative AI companies but also to Sarah's what do you mean by AI native companies that basically are built on some sort of core infrastructure right so there's there are companies that and this goes to um something that I think we were chatting about backstage where there are some companies that are built on top of some of the existing models that's not an AI native company from my perspective um but we and there are some that have their own kind of proprietary data that um that we also invest in I think anybody in the tech world is trying to figure out in some way shape or form what they should be doing with some of the technology that's out there and therefore it is touching every aspect of the companies that we work with I mean uh just stay with me for this but do you see a difference in valuation between AI native companies versus AI leveraging companies um or is it all cha at the point well I think every company at this point well depending on whether you're AI native or not everybody buys a a domain name and tries to get a valuation premium so um that's that's kind of what we're seeing um respect the hustle yeah 100% John um would love to get your perspective on this because you're not investing in firms this is not your domain at all but you obviously spun out had a wonderful tool that worked very very well for emerge 9 right and then you went and you got capital Capital to invest and build on it can you tell us how you got additional investors to you know buy into this AI product yeah I mean I think we we had the benefit that we had a a working product um operating at scale with large uh institutions uh so sort of proven I think um you know one of the challenges for a lot of the AI startups is that it's all relatively new uh you're building at least we're we're an AI app and we we build uh on top of uh existing llms uh but for for companies uh in our segment um the challenge is always how do you build something that's that's useful that's incremental to what you might get on llm um and um so a lot of the stuff out there is um you know we' call sort of vaporware um so our our benefit was we have a sort of real tool that's that's useful that's that's proven and so that for us was a you know big advantage does your domain name have ai in it no we don't we just call ourselves Bullpen although the domain name uh does have a because that's what we were able to buy okay yeah as expected but I mean if that's what you're doing you got to flaunt it right you got to flaunt it Sarah let's go back to you because you've done tremendous amounts of investing in the in the Mena region um I know you're not actively actively targeting AI firms but your portfolio companies have been leveraging them tremendously can you tell us a little bit about what you're seeing yeah I think we had a quick conversation on this I think what's super exciting for me as an investor that looks into Mina companies is uh every one of our companies uh took a step back and looked at how AI can potentially make the company more efficient from my perspective we always talk about how Talent is super difficult to find in this region the thing that excites me the most is a lot of our companies Now can do with one engineer what they uh could could have done with 10 Engineers with using the right tools and the right resources specifically using AI uh from my perspective as an investor as well we also leverage uh those Technologies internally uh in terms of like search uh uh due diligence even making our uh uh processes better so definitely seeing a lot of changes here and to S Deep's point I think uh most companies now uh put in an AI spin on what they do on kind of payment as an AI company but the best Founders really see it as uh how can they take that technology and make the company better more efficient maybe without inflating the valuation too much um and better part the shareholders Sarah you do value creation as well with your firms right but right do they ever come to you and ask should we be looking at Ai and what should we be doing with it or is is there some sort of mentorship aspect that's necessary so that's a great point we actually have two Venture partners and both Venture partners backgrounds are uh in AI so J Amar has been a venture partner for a couple of years now he's a director at kohir one of the leading AI companies and the way that we kind of approach value creation from an AI standpoint is we give them the right Network um uh we had a summit a couple of weeks ago where multiple conversations on ai ai happened um I guess the way to approach this is not to kind of package it as a one one product thing but rather curate those mentorship and advice sessions with those experts on a company basis okay very good San you invest at fairly big ticket sizes do your firms listen to you at all they listen to your opinion on AI at all or they do their own thing are they leveraging it um I would actually put the spin the other way where a lot of the companies that we work with are extremely fast growing and the relationships with the founders that I'll typically have more often than not they'll come to me and they'll say hey we came across this tool you should either look into investing in it or you should introduce some of your other Founders to this portfolio company because it's amazing um do you give Kickbacks excuse me do you give Kickbacks to them for referral referral uh no it's all about being a good partner it's ultimately what we try not to do is try and establish a tit fortat relationship these are long-term Partnerships that we have with with Founders and um and that's ultimately the folks that we we try and work with it's just it's just works the quality of a good relationship well like it shows it shows that you have trust and also it shows that you know when you build a community um your portfolio is also your best um I guess marketable tool in a way right so it's that your portfolio that talks about on your behalf um did you want to say were you finished I don't think you were finished no I mean yeah that's I mean that's basically how we think about when we are coming across to like one thing that we will do when we we find companies that are interesting that have an interesting tool from an investment perspective is also introduce them to our portfolio companies that's one of the things that they're typically looking for um but we just facilitate introductions and the best endorsement that I can get for a company is a delighted customer and um that's for the most part what we're looking for yeah that's good I like that word delight you know because it's true if you have a delightful experience it really does stay in your mind um John going back to you because obviously you're supporting financial institutions with they're reporting you're making things so much easier so much faster um how can you tell us a little bit about the use cases uh how you support these firms well um I think the the first use case was on emerge 9 obviously um we we work on syndications uh there's relatively short periods of time and lots of lots of material to be reviewed on our deals so we decided to um build initial tool to automate our investment reports uh we were finding that we would spend on average you know 5 to 10 hours to right uh you know six to eight page memo and uh with the use of our tool we got that down to first draft about 3 four minutes and final draft client ready in in 30 minutes and then we we added uh some diligence tools to allow people to query uh and get really real-time answers to to to any questions uh literally our deals involve thousands of pages of of of diligence materials and the uh realization that we had to we thought it decided to make sense to offer this at third parties was uh based on a a conversation we had with uh an raia we work with and the ra said well look we're not really interested in the private Equity El you offer but um we have we're looking at investing in one of 11 um infrastructure funds you know could your AI um give me a quick sort of synopsis uh of the 11 funds and uh could the AI then write an IC memo for me and we said well we it it could do that potentially um and we started having a lot of similar conversations that's when we decided to offer it to um the third parties very nice it worked out really well it was like a success story that really grew very quickly so far yeah okay touch on wood um I think I just want to because obviously we are here in Abu Dhabi and Abu has done a tremendous amount of work on you know uh artificial intelligence then an incredible amount of government you know funding to firms doing AI institutions research obviously there is a different way of you know looking at AI depending on which geography you are which uh jurisdictions are looking at it and it it is nonetheless a technology that's become of national importance of sovereignty in a way with many many um government you know funding grants loans that are being you know I guess funneled into it and channeled into it could you tell us a little bit from your perspective geographies what an investor or what of course youve drawn from this the other perspective you'd say um would need to know about this influx of public money coming in um what do they need to as an investor as a private person how do you keep that in mind if you do want to invest in these sort of startups or interact with them who wants to go do we want to do us first yeah sure I'm happy happy to start so um let me decouple a couple of Goos let's talk about Europe and the US and going back to one of the things that I said earlier when it comes to AI native the reality is is that there's a lot of money that's being pumped into a lot of these businesses but the one key thing that is truly the differen maker for these companies is data now if we look at the L LS that are out there most of them have been trained on the same sources so for you to try and go out and compete against them is pretty difficult however one of the things that we've seen in Europe is that they're sitting on pretty large data sources the UK sits on one of the largest data sources of Public Health through the NHS Denmark is similar if you can provide a good regulatory framework and also provide access to some smart people to actually leverage that information that's how you can build something that is truly a differenc maker that is different from some of what the incumbents are offering of of course Capital helps of course it's important to have um uh talent but having access to information the one thing that's also very important in Europe is there's a regulatory framework there's gdpr there privacy concerns considerations all of those things make a very big difference because they know that once they're exporting their technology at least some of the companies that I like I sit on the board of a company called cordi which is a medical scribe for um for doctors and um administrators in healthcare to uh uh transcribe doctor patient interactions that's some of the most sensitive information that could be ex that that could be out there the company started in Denmark right then they went to the UK they have proprietary information that they've built on top of it's an AI native company so when we think about GEOS of course the West Coast the US continues to lead in I mean a lot of the The Cutting Edge Innovation out there but we are seeing AI native companies coming from all sorts of all different parts of the world very insightful Sarah yeah I guess if I can ract what sandip was saying as well I think what's exciting to me as someone who's in the region from the region is I think for the what's happening in AI the emergence of the technology happened at the same time that a lot of the players in the region are also ready to put their foot forward I think capital is maybe the thing that gets brought up the most but there are a lot of other dimensions in the region that can provide an interesting valuable proposition for companies in AI to come and expand here or to come and build from here so for example like commute requires a lot of energy um and the region is uh uh a good uh place for um efficient energy uh costs that's one important thing and then the second thing I think just having the uh uh aspiration and the will to kind of play a major role in this technology I remember I had a conversation with a Facebook engineer who was like I'm so excited that Arabic is already Incorporated in the design of uh like a lot of llms and so on and it's because we have a lot of Arabic speakers now that are participating so I guess just to abstract it it's every region would have its own specific value proposition that can create create a good uh good outcome I just wanted to add one more thing that's really important that I forgot to say is especially as it pertains to this region having Capital partners that understand what it takes to build a technology company is very important so when I see folks like outliers on the cap table it's a extremely strong signal for me that this is a company that that like this is a shareholder base that understands what it Tak takes to build a truly generational company and that makes a very big difference sorry no no no it's fine Theo I we saw it I am going to ask John to close it off um I think one of my questions my final question really is going to be obviously you are working with tremendous amount of firms um they're not just us-based firms are they Global they're Global right so what do you see any jurisdictional any geographical differences in the clients that you you interface and how they see these AI products and these tools I mean I think the theme here and what's exciting is the potential it it has for not only improving the quality of people's work but to to to De decentralize a lot of this work I mean traditionally a lot of a lot of sort of banking for example Investment Bank has been concentrated in large cities like New York or London and I think with um you know Forward Thinking um hubs such as Abu Dhabi this really allows um you know places like this to really accelerate the development and really the potential to take real sort of Global Leadership roles with with the smart use of of these types of Technologies wow I mean I when you think about it that's actually kind of wonderful you know giving opportunity to everybody really I think that mirrors what you had said in the past with the firms and such we are out of time so thank you so much everyone I I hope this was insightful um and I hope you know you'll stay for the next panel thank you so much thanks Gabriela thanks everyone thank you [Music]