Fear and opportunity are opposite sides of the same coin.
Take Cape Fear, North Carolina, for example, which was named as such by Sir Richard Grenville’s crew in 1585 after their ship was stranded behind the cape en route to Roanoke Island. Submerged dangers near the shore and a history of shipwrecks ensured the moniker stuck, yet people persisted in exploring the region because of its economic promise. Learning from experience, explorers charted courses to navigate the many shoals and wrecks, and commerce eventually prospered in the Carolinas.
Following their lead, I founded Cape Fear Ventures to identify and invest in high-impact emerging technologies that will be the foundation of future economies. Artificial intelligence (AI) technologies, widely feared and embraced, epitomize the dichotomy of fear and opportunity and will be Cape Fear Venture’s focus going forward.
We aim to forge connections between capital and groundbreaking, early-stage technologies poised to fuel extraordinary growth. With two decades of experience as a tech founder, investor, and board member, I leverage my expertise to identify and assess the most promising projects meticulously.
Based on the success of previous investments in innovative companies such as SpaceX, Palantir, Sayari, Sequoia, SixGen, Immuta, and ID.me, I am looking to invest our gains in new technologies.
Here are the three most important reasons why Cape Fear Ventures will focus on AI:
Transformative Impact
Since the beginning of the Industrial Revolution, technology has been the most critical and disruptive force in global labor markets. In “The Labor Market Impacts of Technological Change: From Unbridled Enthusiasm to Qualified Optimism to Vast Uncertainty” (2022), David Autor makes an interesting point that over 60% of U.S. jobs done in 2018 had not yet been “invented” in 1940.
While incredible technological advances were made between the end of World War II and the millennium, there are strong indications that the rate and scope of technological innovation arising from AI will far exceed anything experienced in the last century.
Experts are comparing the expected impact of AI to the two most significant revolutions in human history: the Agricultural Revolution (about 10,000 years ago) and the Industrial Revolution (beginning around 1760). With the disruption of that magnitude forecasted, it’s reasonable to expect that a huge percentage of the jobs currently being done will be impacted or altogether replaced by jobs and emerging human roles that we don’t yet know about.
In the realm of AI, the pace of progress is so swift that we find ourselves in a situation where the unknowns far outnumber our knowns. While this can be an unsettling thought for some, those who have seen the impact of smaller-scale disruptions in recent years, such as cloud computing and blockchain technologies, see tremendous potential for human and machine collaboration.
Emerging Use Cases
Daniel Porras Reyes makes a strong case that “innovative and previously unimaginable workflows” will arise from the synthesis of AI, data, and vertical, industry-specific software systems. Reyes’ article focuses on vertical SaaS applications, but the insights hold true for any software system as AI matures and becomes increasingly useful in parsing the ever-growing volume of data being generated by mobile devices and the IoT.
AI will make it possible to make sense of complex relationships and processes that were never before evaluated or contemplated. Even those at the forefront of the AI frontier admit that it’s difficult to speculate about what opportunities for increased efficiency and accelerated growth will emerge in the coming years.
In a 2023 episode of the Lex Fridman Podcast, Fridman interviewed Sam Altman of OpenAI and asked about the impact of AI on jobs. The discussion, although limited to only a few specific fields, provides a lens through which to contemplate how AI will change the future of work. While Altman stated that AI systems will make a lot of jobs “just go away” as previous technological revolutions have, he qualified that AI also “will enhance many jobs and make them much better, much more fun, much higher paid.”
He also commented on broader, demand-driven economic effects of AI that will actually drive a need for human labor. Speculating about how AI tools may affect the demand for software engineers, for example, Altman does not expect that AI will replace them. To the contrary, he said, “I think the world is going to find out that if you can have ten times as much code at the same price, you can just use even more. So write even more code.”
As the founder of OpenAI, the largest and most influential AI platform in existence, Altman acknowledged that AI will “create new jobs that are difficult for us to imagine, even if we’re starting to see the first glimpses of them.”
Cape Fear Ventures is focused on identifying these new glimpses on the horizon and delivering the capital needed to scale them.
Unprecedented Opportunity
The level of optimism surrounding the economic potential of AI is simply astonishing:
- In 2023, AI companies raised $50 billion in VC investments.
- AI startups attracted one out of every three dollars invested in U.S. startups in 2023, doubling its share of all startup investments made in 2022.
- Investment in generative AI (GenAI) solutions is expected to reach $143 billion in 2027, with a 5-year compound annual growth rate (CAGR) of 73.3%.
- PwC’s Global Artificial Intelligence Study found that “AI could contribute up to $15.7 trillion to the global economy in 2030,” potentially resulting in an “up to 26% boost in GDP for local economies from AI” by that same year.
We are still in the early days of the AI Revolution, and the results are already compelling. A 2023 study backed by Microsoft revealed that for every $1 invested in AI, companies are realizing an average return of $3.50.
Such overwhelming data begs the question: What do so many sophisticated institutional and VC investors see to warrant such a universally bullish outlook?
Generational Economic Realignment
AI is unique because it realigns the entire economy systemically — no sector, industry, business, or process will be untouched. For perspective, the impact and scale of the AI Revolution resemble those of the discovery of electricity. Opportunities of this magnitude are rare, and those who invest early in leading-edge technologies stand to realize incredible gains.
Charting the Course of Investment and Innovation
While AI and related technologies are unique in terms of the scale of the opportunity, they are still just technologies — and everything we’ve learned about investing in emerging tech applies. A skillful, disciplined approach is required to evaluate opportunities in this sector, and moving forward, I will rely on the same expertise that led to success in my earlier investments.
Ohanafy is one of the first technologies that Cape Fear Ventures invested in, and it’s a great example of the level of innovation we’re looking for. With increased competition, regulation, and economic impacts on the craft beverage industry, suppliers, breweries, distributors, and retailers must adopt new innovative methods to improve sales, inventory visibility, operational efficiency, and margins. Ian Padrick and his team at Ohanafy developed a purposefully built world-class digital transformation platform to catalyze revenue growth, reduce costs, and streamline operational efficiency and decsion making for producers, distributors, and importers at scale. It uses predictive analytics and AI to streamline processes and maximize efficiency, visibility, and profitability for the industry’s three main groups of stakeholders.
Cape Fear Ventures is actively seeking investment opportunities in high-impact technologies that substantially benefit industries on the brink of digital transformation. We are dedicated to identifying and supporting founders who demonstrate the potential to drive significant positive change within their respective sectors.
Please feel free to contact me through LinkedIn if you are a founder with a novel technology that might be a good fit for Cape Fear Ventures. Likewise, if you’re looking to invest in AI or emerging technologies but aren’t sure about how to assess and vet potential startups, please reach out. I’m also looking for new investors and would love to learn more about your strategy and goals.