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Investing in tomorrow’s tech: the meteoric race to dominate AI

13 November 2019

4 minute read

Some fear robots taking over their jobs, some are racing to create them and others are adding them to their portfolios.

Regardless of which camp you fall in; it’s clear the sprint to develop artificial intelligence (AI) has been nothing short of meteoric.

Bristol-born Graphcore has been described as ‘putting AI on steroids’, after the company became a unicorn valued at $1.7bn (£1.3bn) in December 2018. The tech firm has created a chip that can calculate information up to ten times faster than the average computer processing unit today.

Graphcore’s Intelligence Processing Unit (IPU) allows developers to run current machine learning models on a much larger scale too. As a result, robots fitted with the IPU can recognise objects more accurately than humans. This is a huge step forward for AI research.

Investors’ growing hunger

Today, investors are backing promising AI hardware developers with the same amount of vigour as the tech companies looking to lead their markets.

In the US, VC funding for AI firms rose by 72% in 2018 to a record $9.3bn (£7.4bn)1.

Cambridge-based Amadeus Capital Partners is one such fund, investing in innovative technology around the world.

Alex van Someren, Managing Partner, Early Stage Funds, Amadeus, said that the previous successes of Graphcore’s co-founders, Simon Knowles and Nigel Toon, were a key influencing factor in persuading Amadeus to invest in the tech firm.

“The quality of people is the single biggest differentiator for success. This doesn’t mean that serial entrepreneurs will always be more successful, but it’s certainly an aspect we take very seriously,” says van Someren.

“The second thing we consider is the size of the market opportunity and the degree of innovation,” he adds. How new, dramatic and important is a company’s technology?”

The quality of people is the single biggest differentiator for success. This doesn’t mean that serial entrepreneurs will always be more successful, but it’s certainly an aspect we take very seriously.

The innovations cooking up a storm

Beyond Graphcore, Amadeus invests in many other innovative tech firms. One venture is a prize-winning physicist from Cambridge University using quantum physics to improve optical communications.

Quantum technology is increasingly in the spotlight, with Google announcing it had achieved a breakthrough in ‘quantum supremacy,’ in October. The development could allow computers to do calculations at speeds that are inconceivable with today’s technology.

A quantum computer could make a calculation that would take today’s supercomputers years to complete in a matter of minutes.

As the race towards quantum computing heats up, it becomes increasingly likely that these computers will be used to design everything from batteries and solar cells to fertilizers and lifesaving drugs.

Another potential area of development is personalised medicine. In healthcare it turns out that about half the population doesn’t respond to certain drugs. In some cases, there are cancer therapies where the drug can be generated for each individual.

“You have a class of chemical that is whittled down to a very specific medicine based on the unique requirements of each person,” explains van Someren.

Thinking, fast and slow

For private investors looking to enter the tech space, van Someren suggests it’s sometimes tempting to have a “flutter” on an individual business as there are tax breaks that can make it attractive. But this can be a risky investment strategy.

“We spread our risk across multiple business where one or two successful companies more than compensate for several losses,” van Someren suggests.

Not all start-ups will come to fruition as quickly as Graphcore. The concept of the driverless car began as far back as the middle ages, when Leonardo da Vinci sketched a rough blueprint for a self-propelled cart but driverless cars are only now being tested on the streets of London, Miami, New York and San Francisco.

In 2016, the venture capitalist led $2.7m of initial funding into FiveAI, a tech firm which is developing software to enable shared, self-driving vehicles in Europe.

Serial entrepreneur and FiveAI CEO, Stan Boland, says: “If you asked the mayor of any city what their biggest problem is they’re going to say it’s the car. Cities are congested, they’re full of emissions - all those things we can change if we can deliver autonomy as a capability into our cities.

In April this year, FiveAI’s cars (currently with safety drivers behind the wheel) are being tested driving around two London boroughs to see how the scheme could work.

“Getting our cars on the streets of London is a massive step forwards and we’ve now done thousands of miles of testing on public roads with all sorts of complexity,” says Boland.

Entrepreneurs, investors and academics

Many of these technology firms, academic practitioners and investors will be congregating on November 14-15 for the Barclays Private Bank Global Technology event.

This includes FiveAI’s Stan Boland, Blaise Thomson, the Founder of VocalIQ (acquired by Apple) and Alex van Someren of Amadeus among many more.

“As technological development unfolds at pace, investors are trying to identify the new disruptors, which could innovate to become the next Google or Amazon” says Rob Agnew, Managing Director of High Growth Fin/Tech Founders and Investors, Barclays Private Bank.

“This requires investors to go beyond the conventional wisdom of traditional investment holdings. In so doing, it is essential that they are both better informed and well-connected with the expert professional venture capital investors if they are going to succeed in identifying the growth opportunities of the future” he adds.

For more information on the Barclays Private Bank ‘Global tech through a Cambridge lens’ event, if you have any questions about the issues discussed in this article, speak to your Private Banker or contact us.

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