AI Investment Sounds Obvious to Startup Bros Until an Investor Asks for Proof

Read time: 2.5 minutes

What Is The Best Way To Show AI Investments, So That Investors Believe In Them?

1. Do Not Sell “Artificial Intelligence,” Sell a Removed Business Constraint
   Capability is easy to obtain; removing constraints, however, is where value lies.
   Correct Action: Identify the bottleneck that AI will eliminate (i.e., reviewing layers, manual quality assurance, handoffs, compliance steps).

2. “Time Saved” Is Not ROI
   Time saved is often a new “how to do it” method, rather than creating additional profits due to the expansion of profit margin.
   Correct Action: Show output per FTE, or cost per unit, or cycle time reduction.

3. Investors Do Not Underwrite Demos
   A successful demo will demonstrate that the model works; however, it will not demonstrate whether the company is successful.
   Correct Action: Show the Before-After workflow, and the number of steps that were eliminated.

4. Human Reviewers Equate To No Leverage
   Adding reviewers is considered a new cost to the company; therefore, it does not produce productivity.
   Correct Action: Provide documentation as to what decisions can be made without any human intervention and what decisions need to be escalated.

5. The Real Moat Is A Change In Operating Model
   Models are being imitated quickly; however, work redesigns take time.
   Correct Action: Describe what has changed in the roles, incentives or ownership as a result of the utilization of AI.

💡Key Takeaway: 

The vision is what startup entrepreneurs go by... however, the financial figure is what the investor will use for their decision-making. If you cannot quantify the use of AI in terms of leveraging operationally, your pitch will perish the second serious question is posed.