How to invest in artificial intelligence 2018?

machinelearning
ai
investing

#1

I am a successful entrepreneur in the SAAS space. I have recently sold my company and I have allocated a significant portion of my assets into

• Low-cost index funds

• Real Estate

• Currencies…

Now, I want to allocate a small portion of my overall investments into industries with great prospects for future growth…

Artificial intelligence has interested me in particular. How can I invest in artificial intelligence in 2018?


#2

The first thing is that it looks like this is an incredibly profitable question to ask:

The venture capital money flowing into AI is absolutely staggering - the future is very likely to be bright for AI!

Deals to AI start-ups have increased something like 4.6x in the last five years, from 2012 (150) to 2016 (698)…

Anyway…

Investing in AI is tricky at the moment. There is a lot of money behind AI-led start-ups, however many of these companies are not yet public. This leaves you with only a few choices.

Invest In Early Stage AI Start-Ups

If you have significant funds, you could invest in one of two start-ups yourself. Each investment would likely be more than 500k and it would also demand significant amounts of time to find these companies and allocate capital to them. Also experience is absolutely essential. If you are not willing to learn about AI, you may need to hire an advisor to help.

This strategy is time-heavy and risk-heavy. It will pay off if you find the next big thing, just don’t be surprised if you lose all your money!

Invest In Public AI Companies

You could wait for the most promising AI companies to go public and invest then. This would mean the B-players would be weeded out and the start-ups with the most potential will pass through…

This is still a risky game, as there is still no evidence that the company will be able to handle the scrutiny that comes with trading stock in the public markets. Just at the recent performance of Snapchat to see how hype does not equal succcess!

Another slant on this would be to invest in companies which are almost impossible to disrupt, but will very likely benefit from the improved processes that AI will bring. A laid a case for investing in Coca-Cola here:

Passive Investment In AI

The last option is to invest in an passive investment instrument such as an ETF, or an index fund. This probably does not need an explanation as most people understand how passive investing works.

I would caution people to casually invest in ETFs however. ETFs usually use complex derivative structures to follow indexes. These structures are not always straight-forward for investors and are (in my opinion) sometimes dangerous.

If you want to apply this strategy, why not try and create your own passive mutual funds tracking a robotics/ai index instead? At least then, you might know where your money is actually going!

Personally, I would avoid ETFs like the plague and only invest in a basket of them tracking the same index. Remember, the index will likely never collapse, but the company providing them could!

Hope this helps!

All views are my own!