Original article was published by FuturistLens on Artificial Intelligence on Medium
Co-founding for Deeptech development: it starts with an idea
Interview with Futuremaker: Salvatore Minetti Part II
Introduction: Incrementalism is the norm in most venture financing with much of the funding going into software applications. Following the shock of the internet bubble pop, most investors steered clear of early-stage financing and played safe by deploying their capital in later rounds after the products have been proven by customer acquisition and the sales momentum has been achieved. Incubation has been rudimentary with modest financing of accelerators at an early stage. Entrepreneurs bear much of the risk and fend for the expertise they need for the venture. In the second part of the interview with Salvatore Minetti, Kishore Jethanandani explored deep-tech investments and what it entails for risk management in venture development.
FuturistLens: What is your understanding of Deeptech? Does it span software, analytics, and hardware or is it limited to software? The applications, such as lead generation, that you have funded appear to be familiar. What makes you characterize them as Deeptech?
SM: Our understanding of Deeptech is that its kernel is science. The applications, such as lead generation by one of our ventures, Prospect, may not be novel but the engine that drives it is a cut above others.
Soffos, currently under development, is a learning and development application that is customized for the needs of each individual and their functions in the organization. The mid-and-large size corporates have bodies of tacit knowledge that they apply to functions like compliance, product development, etc. They have the information corresponding to the knowledge categories that lie in silos. Soffos aggregates that information and filters it with categories, unique for each company, to organize it for learning and development for individuals in clients’ companies. By contrast, most other companies organize information as tutorials in a Q&A format.
All the six companies, three of them currently funded and another three undergoing due diligence, are software start-ups. There are others we are looking at are in robotics with both software and hardware. We expect to have more projects that include hardware. However, the core value, in any of these projects, is in artificial intelligence.
FuturistLens: You have related entities, Fountech Solutions, and Fountech Science, which collaborate with Fountech Ventures. What are the roles they plan in your larger plan for venture development?
SM: Fountech Ventures is a standalone business, but it is part of Fountech.ai which is the mothership. Fountech.ai is a think-tank and a lobbyist for the development of the next generation of AI. In that family are a couple of subsidiaries — Fountech Ventures, where I am the CEO, is one of them.
Another one is Fountech Solutions which is a consultancy business. Its services are sought when clients want to develop an in-house capability for AI and they want to prepare a technical roadmap. After the pathway is mapped out, those organizations also seek assistance to build the technology. These are not plug-and-play AI solutions but a core competence that companies can acquire to outcompete their peers.
Fountech Science is a pure science shop funded by grants from the EU and other patrons. It assesses what is next in AI. It is staffed by Ph.ds and engineers who understand the AI landscape — the current state-of-play and what is emerging. The knowledge that it acquires is used as input for Fountech Ventures or Fountech Solutions.
AI permeates our business and we scan for opportunities in it which helps us to look at alternative courses of action. The advantage that we gain from understanding the bigger picture of the AI industry helps us suggest to early-stage ventures how to look at their choices from the perspective of the big picture of a spectrum of opportunities and ways to strengthen their own plans.
FuturistLens: How do these entities then affect the way you support the development of early-stage enterprises?
SM: After we craft a model for the technology, team, and the product-market fit, the key piece of advice that we provide is to pursue a modular solution and not be encumbered by a technology stack. You can then reuse some of the modules for multiple applications. Some ventures may not want to spend on overheads of facilities or staff in their early stages and they have the option to seek assistance from Fountech Solutions to build the technology.
FuturistLens: Most investment companies have a regional focus to avoid travel and want to be at home in a business culture they understand. You have presence both in Britain and the USA. What purpose does that serve?
SM: The large majority of companies we have served or funded have wanted or aspired a US launch. They see expansion in the US as part of their roadmap. Because we have a presence in Austin, Texas and the investment arm resides there, we can provide all the professional services for a successful launch in the US. The companies that have tried to do it on their own have failed often. Without a footprint in the US, with human networks, it is extremely hard to make it work.
FuturistLens: What is the distinctive advantage in the commercialization of early-stage technologies that is not available to otherwise with firms that commercialize embryonic technologies from universities and corporate labs?
SM: Today, the challenge is to use AI for a larger market beyond the early adopters. While there is an acceptance that AI is going mainstream, its adoption in the enterprise entails cultural transformation and organizational restructuring that managements try to avoid if they can help it. Increasingly, companies will look for solutions that will come embedded with related technologies like hardware and software that will not disturb the normal rhythm of business operations. Beginning this year, we will start to see this happen and will peak in another five years. Of course, AI is chasing moving targets and could well encounter higher hurdles for adoption.
FururistLens: How is the role of entrepreneurs complementary with that of the services you provide?
SM: We are co-founders, a part of the team for the venture, and not third parties that invest. With our proximity to the ventures’ teams, we can observe its progress at each of the inflection points where critical decisions are made. We provide inputs to the decision-making process that de-risks the project. Because we invest at all stages of the project from pre-seed to Series A until the exit happens, we can de-risk the project throughout its lifecycle.
We are careful not to second-guess entrepreneurs who are themselves visionaries and are full of ideas. We don’t add to the stock of ideas but rationalize them by narrowing down the scope to a few ideas that they can successfully complete at any given point in time and formulate a strategy that is aligned with the realities in their marketplace so that their energies are focused on micro-niche markets where they will do best and dominate them rather than spread their energies widely.