At Corestrat Ventures, we believe 2024 will be a pivotal year for artificial intelligence as emerging innovations drive wider adoption across industries. Here we discuss key AI trends we see shaping up and why they excite us as investors:
What are the top AI innovation trends you are currently monitoring in 2024, and why do you believe they hold significant potential?
We’re tracking several high-potential sectors as AI continues to evolve rapidly. We are interested in startups focused on developing AI solutions tailored to specific verticals like healthcare, finance, insurance. A key focus area is AI applications in finance, like automated trading platforms powered by deep learning algorithms and AI risk models for fraud detection, are also promising. AI-driven fintech solutions offer efficiency and personalization.
Another area we look at is healthcare, AI-powered solutions like predictive analytics, personalized medicine, and improved diagnostics have enormous potential to transform patient outcomes. We believe healthcare AI startups are attractive bets. Another exciting frontier for us is the intersection of quantum computing and AI, the emergence of quantum AI presents new frontiers. Though Quantum AI remains nascent, the possibilities are far-reaching.
Oh, and Natural language processing advances are also opening new vistas, especially in deep learning for text. Definitely potential there.
And an overarching trend is AI-as-a-service — startups democratizing AI through APIs, platforms and no-code tools, AI is now in reach for most organizations. It’s fueling wider AI adoption which is great to see.
These sectors represent promising innovation trajectories for AI’s evolution. Our fund sees strong potential as these startups solve tough challenges, unlock new use cases, and help propel AI into the mainstream. We’re committed to backing the most transformative companies pushing AI forward across industries.
How has your investment strategy evolved in response to the latest developments in AI, and what sectors within AI are you most focused on?
The rapid evolution of AI technology and applications has significantly influenced our investment strategy. We recognize the need to adapt quickly to capitalize on the most promising sectors and innovations in the AI landscape.
Firstly, we are now taking a cross-industry approach rather than limiting ourselves to specialized sectors. With AI permeating every industry, we are actively diversifying into healthcare, transportation, finance, retail, and other verticals. This spreads risk and allows us to tap into the unique AI opportunities arising in each area.
Secondly, we are emphasizing early-stage investments into emerging startups at the cutting edge of AI research and development. By supporting innovative companies early, we can nurture transformative ideas from the ground up before valuation inflection points.
Thirdly, our investment decisions prioritize scalable and sustainable AI businesses with large addressable markets and defensible competitive advantages. We avoid niche plays lacking growth runway or viability.
Overall, through strategic diversification, early-stage emphasis, and sustainability analysis, we aim to back the most promising AI companies set to drive real-world impact and gains for our investment portfolio.
What do you see as the biggest challenges and risks facing AI startups in 2024, and how should they navigate these?
Look, the reality is that 9 out of 10 AI startups fail in the first few years. The costs and technical hurdles are immense for unproven players. But the challenges, while real, can be navigated by smart founders.
Based on our experience, some of the biggest challenges include:
Number 1 issue is talent, with scarcity of qualified AI talent, hiring and retaining skilled teams is extremely tough. Startups need to get creative to attract and retain good people. Equity and meaningful work help, but it’s still an uphill battle.
Another problem is technical scalability, Many AI startups struggle to scale up their solutions beyond proof-of-concepts and pilots due to the technical complexities involved. Having clear scalability roadmaps, leveraging cloud infrastructure, and architecting for flexibility are key.
Next is funding which tight especially in markets like today, Seed rounds have shrunk, and investors are picky about unproven AI plays. Founders need solid business models and clear go-to-market plans to navigate this issue.
Oh, and carving a niche is crucial. Big players with deep pockets are jumping into AI across sectors, hence, it becomes critical to differentiate. We recommend startups target underserved niches and rapidly iterate products based on customer feedback.
The regulatory side is messy too. As are biases and data limitations. Our fund evaluates startups based on these facets to mitigate risks and invest in sustainable success stories.
How do you foresee AI-driven Fintech innovations impacting traditional banking and financial services?
We understand that the global market for AI in fintech is massive, projected to reach $61.3 billion by 2031.
As a VC investor focused on fintech, we see immense potential for AI to disrupt banking and financial services. AI can enable highly personalized customer service, enhanced risk management and security, operation automation, and improved regulatory compliance. Incumbents that fail to adopt these AI innovations will likely lose out. But financial institutions that embrace AI have huge opportunities to reduce costs, improve offerings, and stay competitive. We are seeking and investing in the most promising startups leveraging AI to redefine the future of banking across customer service, risk management, operations, and compliance.
What kind of support and resources do you offer to AI startups post-investment to ensure their growth and success?
We believe in support beyond just capital, post-investment, we are committed to actively supporting our portfolio companies in various ways to ensure their growth and success. Our support for AI startups post-investment is comprehensive, covering strategic, technical, operational, and market aspects. We believe in being active partners, deeply involved in the startup’s journey, helping them navigate challenges, and capitalizing on opportunities for sustained growth and success. Our goal is not just to fund but to foster innovation and build enduring companies in the AI space.