How family offices can access AI through venture capital

The advent of Artificial Intelligence (AI) has ushered us into a new era of technological innovation, fundamentally altering the landscape of various industries and everyday life. Simple Expert Kjartan Rist discusses how family offices can leverage venture capital to position themselves at the forefront of the AI revolution.
family office AI

What you need to know

  • AI has evolved from a niche concept to a foundational technology across various industries, promising to change how we live and work.
  • The AI landscape, currently dominated by big tech, is set to shift towards startups and entrepreneurs, driving the next wave of innovation.
  • Family offices can invest in a diverse portfolio of AI startups through venture capital firms, mitigating risk and positioning themselves in the high-growth sector.

Venture Capital Published on Simple January 31, 2024

For most people and organisations, the development of AI is very nascent. Thus, most are only now trying to figure out how to learn more and navigate this important innovation. Family offices could be well positioned in this respect, being well-capitalised and accessing AI through venture capital investments, both direct and via funds. Based on this, let us delve into this exciting intersection of AI and family office participation in venture capital.

What is AI?

AI refers to the simulation of human intelligence within machines or computers. These AI systems are designed to perform tasks that typically require human intelligence, such as visual perception, speech recognition, decision-making, language translation, etc. Albeit an old concept, the growth in the underlying tech stack, computing power and enhanced software developments have increased the speed of developments over the last few years.

AI’s ubiquity and impact

AI has transitioned from a niche area to potentially becoming the pivotal foundation technology in numerous sectors. Its applications range from simple automation to highly complex problem-solving tasks, and it’s increasingly becoming a critical component of modern software solutions. The opportunities are vast and how we manage the development of its potential and apply the underlying technology to real-life applications can prove to be a quantum leap for most industries.

“Software is eating the world”

Marc Andreessen’s famous statement, “Software is eating the world,” highlights the pervasiveness of software in today’s digital landscape. AI is seen as the next evolution of software, offering more advanced, adaptable, and intelligent solutions. As human beings, we will need to adapt as its broad impact will play a crucial role in developing industries, societies and innovation. Our role will change, and we will have to allow progress to happen again.

What is for sure is that AI’s influence extends across various domains. From healthcare and finance to transportation and entertainment, it promises to redefine how we live and work.

Current dominance

The AI landscape is currently dominated by big tech companies with access to vast data and resources. However, the future of AI is expected to be shaped significantly by smaller, agile startups and entrepreneurs rather than established corporates or governmental initiatives.

The entrepreneurial sector is poised to challenge the monopoly of big tech companies, especially in developing complex AI solutions, computational models as well as advanced AI models like large language models (LLMs).

Venture capital’s support for AI entrepreneurs

Venture capital plays a crucial role in nurturing AI startups, providing not just funding but also strategic guidance, network access, and market insights. The next wave of AI innovation is expected to be driven by a symbiotic relationship between entrepreneurs and venture capitalists, combining technological, creative vision with financial and strategic support.

Family offices’ role in the AI revolution

One key route for family offices to participate in the AI revolution is by investing in venture capital funds that have exposure to AI startups. This approach allows them to tap into the potential of AI without needing direct expertise in the field.

Collaborations between family offices and venture capital firms can create mutual benefits. Family offices bring patient capital and a long-term investment perspective, which are valuable when nurturing AI ventures that may have extended development timelines.

Navigating the AI landscape

For family offices new to AI, partnering with experienced venture capitalists offers a guided path to understanding and leveraging AI technologies effectively. Family offices have a unique opportunity to be part of the AI transformation by leveraging their capital and strategic alliances with venture capital firms and, thus, the leading entrepreneurs.

This involvement not only promises financial returns but also enables them to contribute to shaping the future of AI, driving innovation and societal impact. By understanding AI’s potential and strategically partnering with venture capitalists, family offices can play a significant role in this dynamic and rapidly evolving field.

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About the Authors

Kjartan Rist

Kjartan Rist

Venture capital investing

Kjartan is a Founding Partner of Concentric, the London & Copenhagen-based venture capital firm. He helps family offices gain a better understanding of VC investments and how to allocate towards this.

Connect with Kjartan Rist