The power of AI lies in in its predictability. Given enough data, it is common sense that a machine learning algorithm can predict anything – for example, which word will appear next in a sentence. Given that potential, it’s no surprise that enterprising investment firms have sought to leverage AI to inform their decisions.
There is certainly a wealth of data one can use to train an AI-powered appraisal or investment recommendation engine, including sources such as LinkedIn, PitchBook, Crunchbase, Owler, and the data marketplaces of other third parties. With it, AI-based financial research communication claims can predict a startup’s ability to attract investment, and there may be some truth to this. One research hedge fund performance shows that AI-driven funds have generated higher average monthly returns over a 15-year period than human-guided funds.