Growth and customer acquisition are key, investors tell startups at a go-to-market conference.
Canadian tech investors agree that generative artificial intelligence (AI) is revolutionizing changed math investing in startups. But they disagree on whether the investment hype around AI represents a growing bubble and how important it is.
“AI will not change the world tomorrow, but we are at the beginning of a journey of more than 10 years.”
Emily Walsh
Georgian partners
Toronto-based Georgia Partners has been using the same metrics to evaluate startups for the past 10 years, lead investor Emily Walsh said at the RevStar summit in Montreal. “This is the first time we started tearing it up.”
Walsh added that AI will change the architecture of everything from computing to infrastructure to applications. All investments made may ultimately turn out to be zero, and some of them will create generating companies.
“I wouldn’t do anything differently if the bubble were to inflate in six or 12 months,” Walsh said. “AI will not change the world tomorrow, but we are at the beginning of a journey of more than 10 years.”
As generative artificial intelligence has rapidly spread among consumers and become The basis of a startup strategyIn the US, fears have increased about an investment bubble similar to the dot-com crash of the early 2000s. Bubbles are characterized by increased investment in overvalued companies that eventually burst, wiping out profits. Even Bill Gates said this week that many of these investments in AI will be “dead ends.”
At the heart of all this is the unprecedented amount of money that artificial intelligence companies are spending on infrastructure and computing. While Canada's top AI companies don't spend as much as big U.S. tech companies, domestic brands are just as tied to the market, especially those that rely on commercial LLMs to build software products.
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Jim Texier, partner and CTO at Framework Venture Partners, said during the discussion that the AI market correction will happen sooner rather than later. He referred high expectationsTouted by leaders Google and OpenAI, so-called artificial general intelligence (AGI) is coming within a few years.
“We always overestimate at the beginning,” Texier said of the technical capabilities. “I think that [market] the correction will happen much earlier. Let's talk again in three years.”
For Walsh, the bubble is less important than the growing market that AI is creating for new startups. She stressed that the main aspiration should be growth. “It’s time to attract new clients,” she said.
Karamdeep Nijjar, a partner at Inovia Capital, said on stage that this is a “terrible” time for software or artificial intelligence startups.
“There's somebody else creating a version of what you're building, and once you're successful, 10 more people will come along and create a version of what you're building,” he said. “Everything you set out to do a few years ago, you'll have to do faster. That genie will never go back into the bottle.”
Despite the intense competition, Nijjar told BetaKit after the panel that he sees huge potential in startups building AI technologies beyond large language models (LLMs), the core technology behind ChatGPT, Gemini and other consumer and commercial AI products.
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“We spent a lot of time looking at what comes after the LLM, which can solve problems that the LLM isn’t necessarily suited to solve,” Nijjar said. “There was no way this race was ever held.”
He added that Canada should sharpen its edge in this area because of its strong artificial intelligence research community, including centers such as Mila in Montreal and the Alberta Institute for Machine Intelligence. The obstacle, he says, is commercializing these discoveries.
First edition RevStar Summitorganized by a startup platform for entering the market Vasco and Boreal Ventures, specializing in commercialization and go-to-market strategies for Canadian startups. Guillaume Jacquet, CEO of Vasco and former executive vice president of products at Lightspeed, told BetaKit that the company aims to fill the distribution knowledge gap for Canadian companies seeking global scale.
“With AI, we really have the opportunity to level the playing field and compete on a global scale,” Jacquet said. “But we have to take advantage of it, and I wouldn’t want Canada to miss out on it.”
Image courtesy of Alexander Belair for RevStar Summit.
