5 exciting and investable AI themes

A few weeks ago I spoke at SaaStr Annual, the largest B2B software conference, about investing in artificial intelligence. BSV looks for early-stage startups that are solving real problems facing new or traditional industries, but something we believe just as firmly is that these startups are found both in and outside of Silicon Valley. Here are some of the themes AI is transforming, US-wide, for the industries that we invest in.

1. Democratizing access

AI can significantly reduces the cost of serving amass market which allows everybody to enjoy the benefits of premium services. For example, Deep Sentinel, located in the Bay Area, is developing a security system that leverages AI to narrow down the signals that human needs to process which allows everyone to have private security guards 24/7 for $50 a month, instead of the thousands of dollars that only the wealthy can afford.

2. Automating repeatable processes with clear ROI

AI can automate repeatable processes and make them easier to manage, more accurate, cheaper, faster, always available, and allow organizations to be completely in control of the tools and data. Take Rasa for example, operating between Berlin and San Francisco, allows developers to build customized conversational UI interfaces for organizations, which are typically done completely manually, and drastically increase ROI.

3. Solving labor shortage issues

AI can help solve the labor shortage issues, particularly in industries like manufacturing and agriculture which are in desperate need of labor. We’re excited by companies like an Ohio-based startup that’s building autonomous machines for welding. The industry has an increasing demand of 7% but decreasing supply of 4% annually. If nothing is done, we’ll see 400,000 gap in roles by 20x.

4. Augmenting human potential

AI can solve problems that humans were unable to solve in the past. Bay Area-based Verge Genomics is a good example of this. Drug discovery used to take a lot of guesswork and a long time, but with machine learning, scientists are able to process the “bar code” (genetic information) and discover the best treatment for each disease.

5. Scaling AI infrastructures

As AI is used in every vertical and function, scaling the infrastructure is becoming more and more important. Companies that focus on helping make that process easy will have a huge demand. For example, Mythic, located in Texas, offers a platform that frees local AI from the cloud and conventional on-device technologies that limit sophistication.

It’s worth noting that 3 of the 5 examples given above are not located in the Bay Area — now more than ever, we’re seeing an increase in AI companies launching outside of Silicon Valley. As this trend grows we’re seeing startups that cater to the strengths of their regions and solve problems their local ecosystem needs solved. We are excited about the new tech hubs emerging in places like the Midwest (see below chart for more examples).

In an area like AI where so much is yet to be developed or defined, we’re inspired by entrepreneurs building companies that address problems they’re intimately familiar with, even if the problem doesn’t look like ones that technology startups have typically been solving for. Whatever problem your startup applies AI to solve for, the entrepreneurs who figure out your unfair advantage — and then capitalize on it — are those who excite us most. Drop us a line if that’s you.

Authored by Lan Xuezhao, founding and managing partner at Basis Set Ventures

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