October 3, 2022

The power of artificial intelligence lies in its predictive prowess. If enough data is fed in, as conventional thinking says, a machine learning algorithm can predict just about anything – for example, which word will appear next in a sentence. Given this potential, it is not surprising that venture investment firms are looking to take advantage of artificial intelligence to guide their decision-making.

There is certainly a lot of data one might use for an AI-backed due diligence training or investment recommendation tool, including sources like LinkedIn, PitchBook, Crunchbase, Owler, and other third-party data marketplaces. However, AI-powered financial research platforms claim to be able to predict a startup’s ability to attract investments, and there may be some truth to that. One study From hedge fund performance it found that AI-driven funds generated higher average monthly returns over 15 years than their human-directed counterparts.

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