TLDR:
- Follow the money to cut through the AI hype
- AI dealmakers should get a meaningful piece of a fund’s carried interest
Many investors are excited about the potential of artificial intelligence (AI), but it is important to cut through the hype and focus on the financial aspects of AI investments. According to Venture Capital Journal, a key way to evaluate AI deals is to look at the amount of carried interest that the dealmakers are receiving. Carried interest is a share of the profits that the dealmakers receive as compensation, and it can be a good indicator of the potential return on investment for an AI deal.
Investors should look for AI dealmakers who are getting a meaningful piece of the carried interest. This means that they have a strong financial incentive to ensure the success of the AI project. When dealmakers have a significant stake in the success of the project, they are more likely to work hard to overcome challenges and achieve a positive outcome.
Another key factor to consider is the experience and track record of the dealmakers. Investors should look for dealmakers who have a proven ability to generate returns in the AI space. This can be demonstrated through past successful AI investments and a strong network of industry connections.
It is also important to consider the stage of development of the AI technology. Early-stage AI companies may offer higher potential returns, but they also come with higher risks. Investors should carefully evaluate the technology and team behind the AI project to determine if it has the potential to achieve its goals.
Overall, investors should take a pragmatic approach to AI investments and focus on the financial aspects. By following the money and evaluating the carried interest and track record of the dealmakers, investors can cut through the hype and make informed decisions about AI investments.
