Investing your money into anything can often be seen as a gamble. There are a plethora of variables and factors that come into play, which often affect the viability of the investment. However, if you want to take a calculated risk, the returns received can be worth the hassle. Some industries are representative of this sentiment through and through.
Take, for example, artificial intelligence. Colloquially known as AI, many start-ups are constantly looking for funding. With the right investment secured, AI start-ups can see some truly exponential growth in the years to come.
Let’s learn more about the process of how to invest in AI startups.
1. Build the AI
Whenever you invest in AI startups, the first thing to consider is its overall viability. Does the start-up have a blueprint on how to build the machine from start to finish? How long will it take to successfully implement? These are important questions that need to be considered, prior to investing into it.
Many software applications can range in difficulty, in terms of actual construction. They can be as simple as a convenient app, to a more challenging form of a machine learning-based application. Try to decide if the project in question is actually worth the continual investment, once you take a look at its blueprint.
2. Assess interest in the AI startup
While taking into consideration an AI’s timeline for construction is important, it is just one of two key factors. The other chief element to consider prior to investment is its potential likeability. Consumers will remain loyal to an AI-based product, if they like it and if it suits their needs.
Continual usage of the software is the goal of any AI start-up. That is why you must decide for yourself on whether or not investing into it is worth it. If you can determine the likeability factor of the start-up in question, you may have a goldmine of potential monetary returns on your hands.
3. Expect limited profits at the start
Many in the business world still perceive AI to be a niche industry, despite its overall explosion in popularity. For start-ups, this notion still remains true. With the risk of it becoming oversaturated, an AI start-up has to truly have something original and useful on their hands.
Even if you decide to invest into a creative AI endeavour, you are not likely to see any profit in the short-term. AI start-ups take time to make capital; this is where patience will play a key factor. If you can stay the course with a particular start-up, you may see your patience rewarded in the long run.
4. Diversify your investment portfolio
The key to a great Canada AI investment portfolio is to diversify. You shouldn’t rely on one investment to return a single stream of profits. The buy-in rate for AI start-ups are generally low; invest into a handful if possible! Not only is this a great way to see what’s out there, but you mitigate your overall chances of risk.
Some AI start-ups will even do the legwork for you, in terms of aiding your search for a diversified portfolio. Due to some data-driven initiatives, you may end up gaining more knowledge about AI start-ups than you had prior to investing. Investment is all about taking chances, but the rewards you may receive can ultimately be worth it.
5. Make the AI more sophisticated
The term AI is often thrown around in order to make start-ups seem enticing. The ability of a computer to power a software application is truly miraculous. However, the term itself in recent years is used quite haphazardly. Many start-ups try to reel investors in by using AI as a key word in their business.
Sometimes, AI doesn’t even play a significant factor in their overall company. While making a chatbot is simple enough, true AI-driven start-ups use a much more complicated and intricate software process. Always do your due diligence into a start-up’s potential with artificial intelligence.
6. Research growth opportunities for the AI startup
In life, you can never be too informed. This is especially true for investment, and even more important for investing into AI start-ups. The language surrounding these companies are often advanced, and aren’t friendly to the common investor. To play it safe, always research the key demographics.
You’ll want to dive into the experience and qualifications of all those working in the start-up. Try to determine if their credentials align with what they are trying to build. In addition, previous case studies involving their AI will be useful, prior to investing.
The more you become accustomed to specific research techniques, the less risk will be associated with your investments. Always go out of your way to see if the start-up is truly building something worthwhile. That way, you can rest assured that your money will be used wisely!