Investing in AI: How VCs can Navigate the Risks and Opportunities

One of the biggest issues facing VCs today is a lack of transparency – as an industry, professional investors are facing more and more scrutiny in their decisions from LPs. To stay ahead, VCs need to ensure that they have completed full due diligence when making investment recommendations – and there is no sector where this is more important than AI.

As AI rapidly transforms industries and unlocks new opportunities, it is critical for investors to be aware of the potential risks that accompany this technology. While the unlimited potential of AI's boundless brain size and lightning-fast information transmission is impressive, there are also practical risks and ethical issues to be considered, including the unpredictability of singularity and the dangers of unchecked development.

First of all, what exactly is AI? We have all become increasingly familiar with the term and many are using it in their everyday lives, but how does it work? AI is an artificial neural network inspired by the operating system of our own human brains. It uses mathematics to simulate the chemical activity of the brain and create this new version of intelligence.

To get an understanding of the strength and potential power of AI, consider this: the size of the human brain is limited, but there is no limit to the size of the AI’s neural network. What’s more, the speed at which a human brain can process information is 120 m/s – AI’s is 299,792,458 m/s.

So, we know AI is a powerful simulation of the human brain – but it is not a replica. There are risks to AI and its development which VCs must be aware of as they look to invest in this continually evolving technology.  

Morals Matter: Invest in AI Companies that Prioritize Privacy and Align with Your Values

AI technology can have a significant impact on society, and it's essential to ensure that the companies you invest in align with your values. With the vast amounts of data that AI systems rely on, it's crucial to prioritise privacy and ethical concerns. It's important to invest in companies that have transparent policies for data collection, storage, and usage, as well as those that take the necessary measures to protect personal information.

Cybersecurity Risks: Protecting AI from Malicious Attacks

AI systems are vulnerable to cyber-attacks, which can cause significant harm to both the system and the organisation. As an investor, it's important to ensure that the companies you invest in have robust security measures to protect against cyber threats. It's essential companies have a comprehensive cybersecurity plan that includes regular security audits, encryption, and training programs for employees.

Development Beyond Human Understanding: Neuronal Cards & Language

Neuronal cards – a concept developed by Nobel Prize in Medicine 1972 winner Edelman Gerald Maurice – is essentially how we develop skills in the brain. To take the example of learning a musical instrument: the more we play it, the bigger and denser it becomes. If we stop playing, the connections in our brain will slowly disappear, in order for other neuronal cards to develop. There is a risk that AI could develop cards that won’t necessarily be comprehended by humans – for example, what if it develops cards which don’t have an equivalent in our human language? While it's impossible to predict every outcome, it's essential to invest in companies that have a comprehensive risk management plan in place. This includes the ability to identify and respond to potential risks, as well as a commitment to transparency and open communication.

AI Consciousness: Unpredictability from Singularity

Investors interested in AI should be familiar with some of the key neuroscience concepts that underpin this technology. For example, there are three types of AI: Artificial Narrow Intelligence (ANI), Artificial General Intelligence (AGI), and Artificial Super Intelligence (ASI). ANI is the most common form of AI, while AGI and ASI are still in development. AGIs are those which have developed consciousness of itself – it can differentiate between itself and the real world. Additionally, investors should understand the concept of singularity, which is when an AGI becomes fully autonomous and can rapidly evolve into an ASI. This has huge risks as the technology then becomes completely unpredictable – so question the AI company you’re looking to invest in about their thoughts on this.

Investing in AI requires a comprehensive understanding of the technology, the potential risks, and the opportunities. It is a technology that can continue to develop faster than we as humans can comprehend it. It's essential to prioritise ethics and cybersecurity, embrace the unknown, and be aware of the neuroscience concepts that underpin this transformative technology. With the right approach, investing in AI can be a lucrative opportunity for those willing to navigate the complexities of this rapidly-evolving field.