One thing I have found helpful is to understand the key risks faced by the startup in the sector that they chose to operate in. Then I seek to understand how well-placed the startup is in mitigating those risks. Additionally, I would look into the context of the data being utilized and the long-term potential of harnessing those data points with the AI technology of the startup.

At Punch Capital, we know AI startups present unique uncertainties, so here’s how we approach them: Assess the Team — We look for founders with both deep technical skills and business insight, especially those who understand the challenges of AI implementation. Validate Unique Tech — In a crowded AI market, it’s crucial that the technology is not only innovative but also defensible—whether it’s unique data, proprietary algorithms, or both. Check Market Demand — We invest in solutions addressing clear, immediate needs, as these often lead to quicker adoption and stronger traction.

Easy one, ask for a demo and code walk through of version 0.1. In the last year I've had lunch or coffee with five seed or pre-seed entrepreneurs who wanted to apply AI to some problem or other. Four hadn't written a line of code and planned to hire developers. The fifth had a slick live demo on his laptop and was happy to run through the code and make a few tweaks in real time. Applying AI has a reasonable technical bar so requires a broad based tech savvy founding team. No better check box than some working code. Should take the right team a few days to create a demo.