Investing in AI is not an easy job. AI technologies are nothing more than black boxes, and unless one is capable enough to dig into lines of code, they may be enigmatic. Merely looking at proof of concepts might not be enough to completely understand the underlying stack behind the specific applications, and this creates a massive barrier for investors to efficiently allow their capitals.

Operational challenges for investing in AI

Investors will have to face various operational challenges, such as balancing the longer term R&D route with monetization in the short term. While a large number of frameworks and libraries are released, but before product performance is acceptable, a significant upfront investment is required. Moreover, not much talent in this field is available, so companies face a challenge in finding the right blend of experience and skills. Besides, most AI systems need data to be functional and practical. Thus, bootstrapping your system without much data in the early days is quite a challenge.

Commercial challenges for investing in AI

As far as commercial challenges are concerned, there are plenty. Since AI products are relatively quiet new in the market, it’s difficult for buyers, most of whom typically belong to the non-technical background, to make a buying decision. Additionally, companies also need to take into consideration how they deliver their products i.e. as SaaS, API, or open source. Moreover, organizations need not only deal with setting up outlets to sell their products but also provide support services to their users.

Financial challenges for investing in AI

Apart from operational and commercial challenges, enterprises have to also face financial challenges. Companies have to decide which type of investors are in the best position to gauge your business. Furthermore, organizations have to take care of publications, recurring revenue, or open source community of users, and what progress is deemed investable. Other financial challenges include focusing on either bespoke projects with clients or core product development.

AI investment climate at present

AI investment is increasing rapidly. According to a research study by Tractica, AI investment will increase from $640 million in 2016 to $37 billion in 2025. Roughly, there are about 900 organizations that are working to address problems in finance and business intelligence. In the U.K alone, around $2 billion were invested. As far as the world climate is concerned, 80% of the deals were less than $5 million in size and about 90% of the cash was invested into companies from U.S.

With leading world powers and a huge number of tech giants focusing their attention on AI, the momentum will only build. Investors will no longer have to wait to see how AI plays out as the technological shift has begun to speed up year after year.