Beyond The Digital Domain: A Venture Capitalist's Perspective On Multimodal Artificial Intelligence Our task is to identify talented tech founders with a grand vision, who aim to tackle some of humanity's hardest problems, from healthcare and drug discovery, to automation, defense, and security.
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As the artificial intelligence (AI) space evolves at an unprecedented rate, many investors—including us at SmartGateVC—are asking questions about which companies will redefine various industries in the next decade, and withstand competition from the giants making significant strides in AI. Based on our experience investing primarily in early-stage AI companies since before it was mainstream, I'm sharing the challenges I am seeing that currently limit AI advancement. Solving these challenges will give birth to a new generation of AI startups, and we are here for it.
AI has seen quantum leaps in its capabilities over the past four years. One can attribute the start of widespread public adoption of the generative AI to the release of OpenAI GPT-3.5 in November 2022, when it acquired over one million users within the first five days. Or maybe the increased awareness of AI's potential was made possible by the introduction of advanced humanoid robots such as Atlas or Tesla Bot that were developed and introduced by Boston Dynamics and Tesla.
It's difficult to pinpoint the exact moment, but at some point in recent years, generative AI (GenAI) became a mainstream concept, with many startups seemingly pivoting to become a generative AI company. One thing is clear: we are only at the beginning of what promises to be an extraordinary decade of innovation, and I am incredibly excited about it. Despite the hype, AI is just getting started. So, what is holding it back?
AI IN THE PHYSICAL WORLD
The vast advancements in AI over the last three to five years have primarily occurred in the digital realm, driven by expansive data sets, complex algorithms, and sophisticated network architectures. But even the most advanced AI systems find it difficult to seamlessly perceive, reason, and manipulate real-world environments.
Current AI models are highly proficient at cognitive tasks, but they face significant challenges in understanding, and interacting with dynamic physical environments in real time. As AI evolves and progresses to the next stage, we will witness it penetrate our daily lives beyond the digital domain, fundamentally transforming our physical reality and the way we interact with it.
There are a number of challenges that should be addressed to make the link between AI and the physical world seamless. Among these is the development of highly efficient and rapid systems capable of operating on edge devices with very limited computing power that can process various sensory inputs in real time. The latency and sensitivity involved in real-world interactions require optimized models for edge deployment.
As we embrace this era of physical AI, the concept of AI security takes on a new dimension, necessitating systems that can navigate the world safely to prevent physical dangers and accidents. This emerging field is incredibly exciting, and there is a significant gap in this area. We are eager to fund the next generation of founders who will bridge this gap and drive innovation forward.
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THE RISE OF INDUSTRY-SPECIFIC LARGE LANGUAGE MODELS
The launch and widespread adoption of GPT-3 in 2023 led to the emergence of hundreds of application-layer large language model (LLM) companies. It seemed that every accelerator demo day I attended at the time was dominated by startups attempting to reposition and build their businesses on top of LLMs, without significant differentiation.
The main challenge for these companies lies in their defensibility and their ability to coexist alongside major players. Companies that own or can acquire large volumes of high-quality, low-cost, industry-specific, and accurately labeled data will dominate the application layer of LLM technology. A few of the industries that we believe will be transformed by these companies include computational biology, corporate data, and healthcare.
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AI-POWERED HUMAN TRANSFORMATION
While AI advancements across various industries pose risks to human jobs, some AI companies are exploring ways to enhance the human brain with AI, by not only addressing critical health issues such as dementia and depression, but boosting human productivity. The next major wave of companies that will profoundly impact our lives in the coming decade are those aiming to integrate AI with the most intriguing human organ: the brain.
Just a few months ago, the world watched in awe as Neuralink technology enabled a paralyzed patient to play chess using brain signals. Neuralink is among a select group of notable companies driving the brain-computer technology revolution. Combining advancements in brain-computer interface (BCI) technology with recent developments in LLMs could enable companies not only to predict what a patient is trying to communicate. but also to implement these thoughts in real-world settings.
The human transformation in the next decade powered by AI will be unprecedented. Most of the tech companies pioneering this revolution are yet to be discovered and backed. We are committed to backing the visionary companies that will lead the integration of AI and human cognition.
A NEW ERA OF SECURITY
Security threats have been a major challenge of every era of technological development, from the early days of the dot-com era to the current age of AI. The advancement of technology is a double-edged sword. While AI enables companies to offer solutions that might have been unimaginable a few years ago, it also empowers threat actors to plan and execute cyber attacks that are extremely difficult to track, and can be conducted at scale.
Today's security risks extend beyond software supply chain security. Deploying AI systems behind the digital realm, within the human body, and in the physical world requires scientifically proven security frameworks. We see intriguing research happening in universities to address complex security challenges, and we also interact daily with founders that are building solutions for data privacy, ethical compliance, and risk management.
At SmartGateVC, we are dedicated to finding and backing the next generation of brilliant minds. We seek those who will answer crucial questions: for instance, how does one achieve fast inference and real-time intelligence? What edge computing capabilities and innovative solutions are needed? Which industries are yet to be dominated by LLMs and how—and what are their limitations? What are the security challenges that will accompany the advancement of multimodal AI? And last but not least, where will the next innovation and visionary founder come from?
Being a venture capital investor in an era when AI is rapidly evolving presents an exciting challenge. Our task is to identify talented tech founders with a grand vision, who aim to tackle some of humanity's hardest problems, from healthcare and drug discovery, to automation, defense, and security.
