The New Normal
: Integrative Strategy using AI Ventures
Singapore, 28 July 2022 – Featuring M Nazri , Prof (AI Practice), Founder / Group Chairman & Advisor of AIV50
We’re grateful to get Prof M Nazri’s time today to share his thoughts on how businesses can structure their own financing, pursue digital transformation strategies and boost their business models for strong fundamentals.
Prof Nazri is Thinkers360 #1-ranked Thought Leader in three categories since July 2021: AI, digital transformation and predictive analytics.
Prof Nazri is one of the pioneers and global leader in AI/Analytics since 1999, especially in the Natural Language space. He advises hundreds of public, private and non-profit institutions to harness their data to optimise decision making with predictive and prescriptive analytics.
His modern perspective on integrative growth strategy has led to a $100m worth of deals with SMEs each year to be securitized under special purpose vehicles, and incentivizing business partners in return; that includes a public listing exercise for individual clusters.
Q1. Let’s start with something basic, Prof. Why AI ? I mean, you could’ve done many other things in the finance and consultancy world. Plus, you started early in the analytics space. What drives you in this space?
AI is widely misperceived by purists and sceptics alike. I see it somewhat as a calling to come forward to rectify these views and at the same time, not make AI an elite and exclusive exercise for technical people only.
AI has to make sense of data beyond visualization. It has to have superior decisioning capabilities and yet work alongside humans. We shouldn’t spend too much time churning “technical” terms but rather, “solutions” language when dealing with users.
I love to see people coming out with extraordinary solutions using AI based on their domain expertise or specialization. This is where I get more satisfaction than just calculating risks and financial returns in the financial space.
“AI is widely misperceived by purists and sceptics alike. I see it somewhat as a calling to come forward to rectify these views and at the same time, not make AI an elite and exclusive exercise for technical people only.”
Q2. You mentioned “venture building or studio”. If I may ask, how is this model more superior than a venture capitalist, accelerator or incubator model? How different is your model compared to traditional models?
A venture builder puts almost everything on the table to make it work. Venture builders have to find customers and funding, build a formidable team, execute and monitor revenue-generating activities – not just in one business but a portfolio of businesses.
There must certainly exist a unique system and process at the front end and the back end, for good execution.
Venture builders need to watch their business portfolio 24/7 from the perspective of competitive environment, technological changes, regulatory and market movements as well as their business models along with the team who executes them. They need to provide expert guidance to make the venture successful beyond financial capital – they must be domain experts themselves.
So the contribution by a venture builder compared to venture capitalist goes a lot further – beyond financial capital, the former needs to have that midas touch in every aspect that ultimately leads to supernormal shareholder returns.
“A venture builder puts almost everything on the table to make it work. Venture builders have to find customers and funding, build a formidable team, execute and monitor revenue-generating activities – not just in one business but a portfolio of businesses.”
Q3. How did you come up with the name, “AIV50”? What inspired you to form AIV50?
AIV50 is the short form for AI Ventures for 50 Digital AI Assets. Historically, we have been in operation organically for more than a decade until we realized the sheer pace of technological change that has to be met with a corresponding rapid growth of a business model that is acquisitionary in nature. They need to be calibrated in tandem for optimal outcome.
I got highly inspired with the notion of an integrative growth model using a combination of deeptech, revenue-based financing and merger strategies by pooling resources and clientele network with other businesses. This will make the M&A exercise work. Todate, we have managed to convince businesses and experts alike that this is the next-gen model of investment.
Integrative strategies require leaders to reframe their future with real-world strategies today. Why? As leaders, we need to make big changes fast, and we need strategy that works in today’s real world.
Leaders must clearly see that M&A and partnerships with tech natives – is a critical lever for a successful digital investment strategy – they are shifting to M&A and partnerships to accelerate digital initiatives.
Integrative growth strategies, more than ever, require intensive assessment of investment strategy, talent requirements, operating models and funding constraints.
Q4. There are many alternative financing models out there, where all start-ups or tech players will start to say they provide better deals than traditional banks. What are your thoughts on these, and would businesses really find these useful?
Having choices is very important in Life and in business too. We cannot say there is one definite option that is applicable to everyone. Having said that, we believe in looking at the limitations of choices, and augment them with benefits that they don’t have, while lowering the risks involved at the same time.
How do we do this?
Take a financing instrument, for instance – take the debt out, give some of your equity without the beneficiary diluting anything, and don’t make them lose ownership of their clients, and give them investment income. Securitize their revenue-generating contracts into assets and invest into a special purpose vehicle that they partly own. Pool them together and put them for listing after showing a clear digital transformation impact.
In all typical models of financing such as loans, crowdfunding / p2p financing, factoring, pledging transaction – or assignment of a contract, the financier takes a margin from your contracts i.e. your existing profits or there is a cost of financing, in one way or another. So for instance, if your profit margin for a particular project is 40%, you have to give up a part of this margin technically to finance your cash flows if you take up such a financing arrangement.
In our case, we provide a premium of up to 3x of your contract value and not a discounted value of your contract. The primary condition is that your contract must be legit and entails a cash-based transaction (not just on paper), and there must be a clear intention to adopt technologies that our AI companies must inject as part of a business model enhancement programme to boost your margins.
“… all typical models of financing such as loans, crowdfunding / p2p financing, factoring, pledging transaction – or assignment of a contract, the financier takes a margin from your contracts…”
Q5. AIV50 talks about Sustainable Developmental Goals (SDG) as part of its technology offerings. How are AI technologies linked to SDG and in what ways can AI be impactful to society?
We are observing that the emergence of artificial intelligence (AI) is shaping an increasing range of sectors.
AI can dramatically improve the efficiencies of our workplaces and can augment the work humans can do. When AI takes over repetitive or dangerous tasks, it frees up the human workforce to do work they are better equipped for—tasks that involve creativity and empathy among others.
AI is expected to affect global productivity, equality and inclusion, environmental outcomes, and several other areas, both in the short and long term.
As a matter of fact, there are numerous popular examples of how advances in AI can support our understanding of climate change (SDG13), enable our transition to sustainable transport systems (SDG11), and accelerate agri-tech to help farmers end food poverty and malnutrition (SDG2) among many benefits to the other SDGs too.
With an expanding global population, we face challenges around food demand and production – not only how to reduce malnourishment but the impact on the planet too, such as deforestation, emissions and loss of biodiversity.
To meet these needs, the use of artificial intelligence in agriculture is growing rapidly and is enabling farmers to enhance crop production, direct machinery to carry out tasks autonomously, and identify pest infestations before they occur.
FOR FURTHER DETAILS, PLEASE CONTACT VENTURES@AIV50.COM
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