The strengths of AI are in its predictive power. Conventional thinking holds that given enough data, a machine-learning algorithm can predict just about anything—for example, which word will appear next in a sentence. Given this potential, it’s no surprise that enterprising investment firms seek to use AI to inform their decisions.
There is certainly a wealth of data available to train AI-driven due diligence or investment recommendation tools, including sources such as LinkedIn, PitchBook, Crunchbase, Owler, and other third-party data marketplaces. With it, there may be some truth to the AI-powered financial research platform’s claim to be able to predict a startup’s ability to attract investment.one study A study of hedge fund performance found that AI-driven funds generated higher average monthly returns than human-guided funds over a 15-year period.