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Beyond the Arches

Beyond the Arches #6: How to use private markets to invest in AI

June 25th, 2023 By Emily Norwood

Featured Story

How to use private markets to invest in AI

2023 has been a rough year for the blockchain and crypto sectors. According to Blockdata, investment in the space plunged drastically at the end of 2022.

The implosion of crypto exchange FTX and subsequent SEC lawsuits against Coinbase and Binance have caused further turmoil in the sector and investors are seemingly looking to deploy their capital elsewhere.

Machine learning and artificial intelligence (AI) have caught investors attention in a big way. The sector is picking up venture funding across the board, and for good reason: there’s a fundamental use case for this technology. It’s currently generating real world value and quickly being adopted and leveraged to increase productivity.

So how can investors get involved? There are a few options:

  • Direct startup investments: Investors can commit capital to AI startups directly through seed or series funding rounds. Platforms like WeFunder and StartEngine allow you to identify promising new technologies at an early stage and take an active role in their growth and development. Check out New Sapience, AvaWatz, and Snapify as examples! 
  • Secondary private markets: Digital platforms like EquityZen and Forge allow you to buy shares in private AI companies from employees or early investors who are looking to sell. This can be an opportunity to invest in mature private companies before they go public.
  • AI-adjacent investment: By investing in companies that are leveraging machine learning and AI to boost productivity, your portfolio can still reap the benefits of this emerging tech. Look for franchises, operating companies, and real estate investing firms that utilize AI tools and have seen it make a difference in their bottom line.

We talk about the importance of portfolio diversification constantly and we’re not about to stop now. Although the blockchain and crypto sectors might be flagging, machine learning and AI offer cutting edge investment opportunities with strong long term potential. A smart diversification strategy can help you reap the benefit of investing in emerging technologies even in challenging market conditions.

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Macro Trends

  • The CPI, PPI, import prices, and PCE are all pointing towards weakening price pressures, signaling there may not be the need for the Fed to keep rates high for a prolonged period of time. 
  • The stock markets are feeling optimistic as inflation eases, with both the S&P 500 and Dow Jones eyeing the possibility of record highs.
  • Contracting manufacturing activity, dwindling exports, an uncertain property market, government debt, and record youth unemployment have the Chinese economy on shaky ground, and the impact of these conditions are being felt across the globe.

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