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.


It all begins with a conversation

If you would like to discuss your financial needs with our experts, then please don’t hesitate to contact us.

We serve clients who can establish an investment portfolio of at least £5 million (or local currency equivalent) with us.

Related articles

Investments can fall as well as rise in value. Your capital or the income generated from your investment may be at risk.

This document has been issued by the Investments division at Barclays Private Banking and Overseas Services (“PBOS”) division and is not a product of the Barclays Research department. Any views expressed may differ from those of Barclays Research. All opinions and estimates included in this document constitute our judgment as of the date of the document and may be subject to change without notice. No representation is made as to the accuracy of the assumptions made within, or completeness of, any modeling, scenario analysis or back-testing.

Barclays is not responsible for information stated to be obtained or derived from third party sources or statistical services, and we do not guarantee the information’s accuracy which may be incomplete or condensed.

This document has been prepared for information purposes only and does not constitute a prospectus, an offer, invitation or solicitation to buy or sell securities and is not intended to provide the sole basis for any evaluation of the securities or any other instrument, which may be discussed in it.

Any offer or entry into any transaction requires Barclays’ subsequent formal agreement which will be subject to internal approvals and execution of binding transaction documents. Any past or simulated past performance including back-testing, modeling or scenario analysis contained herein does not predict and is no indication as to future performance. The value of any investment may also fluctuate as a result of market changes.

Neither Barclays, its affiliates nor any of its directors, officers, employees, representatives or agents, accepts any liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this communication or its contents or reliance on the information contained herein, except to the extent this would be prohibited by law or regulation..

This document and the information contained herein may only be distributed and published in jurisdictions in which such distribution and publication is permitted.  You may not distribute this document, in whole or part, without our prior, express written permission. Law or regulation in certain countries may restrict the manner of distribution of this document and persons who come into possession of this document are required to inform themselves of and observe such restrictions.

The contents herein do not constitute investment, legal, tax, accounting or other advice. You should consider your own financial situation, objectives and needs, and conduct your own independent investigation and assessment of the contents of this document, including obtaining investment, legal, tax, accounting and such other advice as you consider necessary or appropriate, before making any investment or other decision.