AI Replaces Humans in Venture Capital Firm


    Deep Knowledge Ventures (DKV), a Hong Kong Venture Capital Firm specializing in bio-technology has appointed an algorithm, VITAL to its board. The AI will get to vote on decisions on investments like the other board members. It has already been part of investment decisions in two start-up life science companies: Pathway Pharmaceuticals Limited in Hong Kong and InSilico Medicine, Inc in Baltimore, US.  

    The Development of VITAL

    The variables involved in the success of a biotech company are many and complex. A senior executive, Dmitry Kaminskiy said: “After gaining some expertise in this sector, we understood that in some sense, playing your money in the casino is similar to an investment in biotech, except at the casino you don’t spend money on maintaining the fund and employing analysts.”

    Aging Analytics, a UK-based agency developed the machine learning software. DKV acquired a team of specialists for the analysis of big data (large data sets that can be analyzed to extract information and reveal patterns). Thus, VITAL – Validating Investment Tool for Advancing Life Sciences was created. It is the first artificial intelligence system for biotech investment research. It enabled the fund to identify more than 50 parameters that were critical for assessing risk factors.

    AI in biotech

    The Edge 

    VITAL uses machine learning to analyze databases of biotech companies. It goes through huge amounts of data – financial trends, the type of firm and clinical trials on drugs to make a decision.

    It searches historical datasets to uncover patterns which are not obvious to humans.

    It showed that the chances of success were much higher in the longevity sub-sector, which seeks to combat the effects of ageing and related diseases. “As this fact became clearer and clearer, our entire focus for the VC fund pivoted to focus exclusively on the longevity sector and on companies that foresaw the coming paradigm shift from treatment to prevention,” said Kaminsky.

    The Future

    DKV is currently working on VITAL 2.0. Kaminsky stated that the new system will have a much higher IQ due to increases in the quality of data available and further diversification of data sources. VITAL 2.0 will integrate data from scientific literature, grants, patent applications, clinical trials and even the biographies of individual team members of companies in which DKV is interested.

    Kaminsky says that these systems are also being used in autonomous cars, investment and hedge fund firms. These companies have started dismissing people and have begun putting algorithms in charge of making decisions. He also expects to see more AI in boardrooms in the near future. 

    Just A Marketing Gimmick?

    Professor Noel Sharkey of the University of Sheffield suspects this to be a publicity stunt. “A lot of companies use large data search to access what is happening on the market, then the board or trusted workers can decide on the advice. With financial markets, algorithms are delegated with decisions. The idea of the algorithm voting is a gimmick. It is not different from the algorithm making a suggestion and the board voting on it.” 

    What do you think? Will algorithms replace humans in companies or will we retain the upper hand? Let us know in the comments.  

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