Everyone is talking about AI at the Collision Technology Conference in Toronto. But as Yahoo Finance Tech reporter Allie Garfinkle explains, most VCs are still window shopping when it comes to investing in AI companies.
video transcript
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– This week, leaders from big tech companies gather in Toronto for the 2023 Collision Conference, and it’s all about AI. Yahoo Finance’s girlfriend Allie Garfinkle is currently onsite at the conference. Ally, what are you listening to?
Ally Garfinkel: Hello, how are you Shauna? In short, Collision is one of the world’s largest technology conferences and a key meeting place for startups and VCs. Well, it looks relatively quiet behind my back now, but this is a conference he expects to draw over 40,000 people over the next few days. And, of course, AI is at the heart of the conference.
So I got here early and have been talking to VCs about what they think about this AI hype cycle we’re in. And surprisingly, no two VCs share the same opinion. But the only thing everyone agrees on is that it’s still early days.
We talk a lot about AI on the show, we’re very excited, and we hear a lot of excitement from analysts, founders, and others. But most of the VCs I’ve spoken to really seem to be in window shopping mode. They are eyeing AI companies, many of which are not ready to buy.
Now, this actually tracks the data we’re looking at. As of May, AI investments accounted for about 13% of all VC investments, and that figure will rise over time. And many of the VCs I spoke to actually wanted to reach out to some of the companies we’re reviewing here. And everyone I talk to, whether it’s in the background, on the record, or off the record, everyone is at AI-related conferences.
Shona, the bottom line here is that the majority of AI investments are still unrealized. And some of them are going to attend this conference.
– Well, some VCs in window-shopping mode, at least when it comes to AI startups, are allies. But among publicly traded companies, we’re seeing a huge surge in excitement about AI. Are some analysts starting to say things are a bit overrated in this area?
Ally Garfinkel: It depends on the company, in short, Akiko. But the long answer is that at this point it’s very difficult for him to determine how overpriced AI companies really are. The best way to describe this is with a metaphor. So be patient.
If you’re familiar with the California Gold Rush metaphor, many of you know that the best way to make money during the Gold Rush is to open a hardware store, provide pickaxes and shovels, and not dig for gold. people are saying Well, the Gold Rush trope, no matter how many times you’ve heard it, doesn’t quite apply when it comes to AI.
I’ve been talking to a lot of these VCs, and a lot of them say that a lot of them still don’t quite understand what a shovel is, and we’re not going to figure it out. I know for a while. So I think there are some questions people have raised about how big the benefits of being a true first mover in AI are. Because I don’t know what those picks and shovels are.
Especially if you’re a VC, I don’t think you can fully pass. So they’re kind of caught in a catch-22. On the other hand, you don’t want to miss the boat. We want to remain competitive. I think this is something that a lot of people, retail investors and others, are very excited about and interested in.
On the other hand, you have to walk certain lines. It must not become fleece. And I think everyone is still trying to figure out what that’s really like.
– they are. And they are trying to find the best investments in that area. Allie Garfinkle is great. Enjoy your conference.thank you
