Failing Unicorns The Aftermath for Investors

[Music] JM for hosting us here for Abu Dhabi Finance week a big thank you to all of you for joining and thank you to our esteemed panelists we have a hell of a group here all leading investors entrepreneurs uh and advisers in their own field um a few years ago you know we all saw the frothiness and and the hyper valuation of of the VC and and Tech Market we're seeing a bit of a comparative cooling now um starting with you tala from your experience what's driving this and what can we attribute that to amazing um so uh first of all uh you know we've seen interest rates go up obviously now they're going down but for the period for when we saw things dry up interest rates uh played a really big role because it just made the opportunity cost of investing in Venture uh much higher uh secondly uh we also saw uh pension Capital dry up which meant that the VCS uh no longer had the dry powder that they had coming into 2019 and 2020 um thirdly I'd like to think that maybe we learned a thing or two uh from you know the big bubble bursting and that you know we are smarter investors as a result but actually if you look over time we tend to forget very quickly and we have um you know the memory of of uh a goldfish um and then finally I think when what's bucking the trend is in fact everything that's happening in AI so when you look at AI businesses they're raising at they're raising rounds that are double uh non you know let's say uh AI Core uh businesses because of course now every startup is an AI startup um and there's actually a very good reason for that um it's not just exuberance um the market exuberance that's driving that it's that actually the cost of compute is requiring these companies um to need more resources about and that additional half um that's extra is actually going into uh investing in in uh in compute uh it's interesting you talk about the the kind of the AI hype curve as well and Jordan and in Your Capacity you probably get pitched 20 30 50 AI Ventures a day what where where do you see the direction of travel moving in in this kind of sub sector and managing a global portfolio what are the nuances and similarities or differences you're seeing between markets in terms of how they're pitching AI for sure I think uh like AI is definitely like a big hype at the moment I feel like there might be a correction next year um particularly with AI companies we you had first s we've been investing in AI companies for at least a decade um we have about 2,000 portfolio companies we've been lucky enough to invest in about 35 unicorns um but we've seen like a big Trend particularly with the unicorns the past like 24 months a lot of them are very curious about what's happening in the Middle East you see a lot of these big AI funds being announced and as you know dry powder is drying up um in the west and the East and so on they're all looking at the Middle East not just from like a funding perspective but also from you know a business development perspective one of our AI companies that we invested in 10 years ago were the first 25k into it they just closed like a $300 million deal um three weeks ago with like a big new entity that was um teed up in Saudi so I think like long story short is uh it is a big hype um but like with us as you know VC's investors it's like a huge risk and tala said we have like the mind memory of a goldfish it is true like we're not going to succeed every time and we have to find the good ones we just need one good one to pay for the the fund you know well the I the good ones right you think you think scalability and fundamentals right and I think maintaining realistic growth targets can often be a huge part of that and that's embedded within that is operational discipline right and so I guess the act from your perspective when you're when you're playing policemen and and vetting all these kind of wide-eyed entrepreneurs when you talk about operational discipline what what are some of the what are some of the red flags or or criteria attributes that investors really need to scrutinize from a DD perspective yeah thank you for that when you're looking at uh Investments for uh potentially for investors into the region uh you're uh you have to be very skeptical of the kind of risks that you're trying to manage uh we are dealing with in the region about 20 to 30 different jurisdictions with different laws different data protection laws different AI laws um and it has to be a get balance between managing growth as well as you know assessing the risks um the times of being a disruptor where you just go in you know the kind of Ubers of the world where you just go in and the regulation sort of catches up is is not there anymore and you need to really carefully analyze uh get the good people on this on your side so that they can manage and assess those risks for you entering different markets and I guess in in terms of that that Journey right the the path to profitability um um is always critical um tala you you in in all your hats as kind of adviser investor and and on the company side what's your kind of heat of caution but advice for for scale ups that are managing that pivot from kind of seed to growth um and managing that probably VC invested need of kind of super fast growth but also maintaining that kind of profitability Le mindset yeah um you know thinking about uh thinking about it from the persp perspective of startups and I'm being humble here because I've never been a Founder um what I've observed from my many Founders is that you know firstly you know running a scaleup is very different to a startup of course your core mission is still there and that's really important and so the culture needs to somehow uh carry forward but you also need to bring in um a new Legion of uh skill sets of people who have seen the cycle play out before and so while your culture at its core is there with [Music]