Venture capital firms invested record amounts of money in artificial intelligence (AI) businesses last year, according to the latest PwC/CB Insights MoneyTree Report. It’s reported that AI-related firms raised up to US$5 billion last year involving a record 444 deals. The investments were made in areas such as basic technologies, auto, financial services, healthcare, pharmaceuticals and retail.
It’s widely believed the AI hype is likely to continue this year. A survey of 260 companies showed that 80 percent of them had made investment in AI. They intend to use AI technology for product development and to improve customer service and operation efficiency.
Some believe AI has already become a mainstream technology, and they expect to make both short-term and long-term gains from these investments. However, I tend to believe AI still has a long way to go before widespread adoption.
Investors should take six points into account when assessing an AI initiative.
1. Usability: AI should be able to provide friendly user interfaces, which let users accept new functions very easily. Excellent user experience is fundamental to the popularity of an AI product.
2. Scalability: Scalability in terms of hardware, software and data is needed to keep up with increasing demand. This will involve some less visible costs, such as redundant construction, technology switch and data management.
3. Data security: Data is the foundation of AI. The risk of data leakage and theft has to be addressed properly.
4. Upgrade: Users will eventually abandon an app if the function does not keep up with their demand. Bear in mind that upgrading will become increasingly difficult with more and more data.
5. Personal touch: Offering users a sense of control and let them select functions they really want in a personalized way will certainly help promote an AI product.
6. Integrity: Reliable AI services should be backed by accurate and consistent data and algorithm.
Huge amount of capital is flowing into AI right now, supporting a boom that has already lasted 10 years. We have to question whether there is over-exuberance behind the capital rush. And pay attention to the customer responses and operating results at companies that have successfully raised money to gauge how real the boom is.
The full article appeared in the Hong Kong Economic Journal on Jan 30
Translation by Julie Zhu
[Chinese version 中文版]
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