Artificial Intelligence (AI) has rapidly evolved from a science fiction concept to a transformative force reshaping industries and everyday life. As the new buzzword in business, AI is often seen as the next great disruptor. The line between science fiction and reality is increasingly blurred, evoking images of a future reminiscent of the Matrix. For investors, understanding AI's development trajectory and its potential impact is crucial for making informed decisions in this burgeoning space. The launch of ChatGPT marks a pivotal moment in the AI revolution, with the potential to reshape our world and the economic ramifications are profound.
The Evolution of AI: A Brief History
AI's roots can be traced back to ancient myths and early philosophical discussions about artificial beings with human-like intelligence. However, modern AI began to take shape in the mid-20th century. In 1956, the term "Artificial Intelligence" was coined during the Dartmouth Conference, marking the birth of AI as an academic discipline. Early research focused on problem-solving and symbolic methods, but progress was slow due to limited computational power and data.
In the 1950s and 1960s, the first AI programs were developed, demonstrating basic reasoning and natural language processing. This period laid the groundwork for the rise of expert systems in the 1980s, which used rule-based logic to mimic decision-making capabilities. A significant milestone was achieved in 1997 when IBM's Deep Blue defeated world chess champion Garry Kasparov, showcasing the potential of AI in complex strategic tasks.
The true evolution of AI began with the advent of deep learning, a subset of machine learning involving neural networks with many layers. Today, deep learning has propelled AI to new heights, with remarkable advancements in various fields. For instance, AI-based chess engine, Stockfish, boasts an ELO rating of 3634, far exceeding that of the most dominant human chess player, Grandmaster Magnus Carlsen, who has an ELO rating of around 2800.
Today, AI impacts almost every aspect of human life and business. In finance, AI-driven algorithms optimize trading strategies, detect fraudulent activities, and provide personalized financial advice. AI also powers recommendation systems in e-commerce, enhances customer service through chatbots, and improves efficiency in logistics and manufacturing through predictive maintenance and automation. In healthcare, AI algorithms assist in diagnosing diseases, personalizing treatment plans, and accelerating drug discovery.
How AI is Transforming Healthcare
Healthcare and biotechnology have long relied on labor-intensive services provided by highly-trained scientist and doctors, resulting in less scalable and less accessible businesses as compared with software-driven industries. The recent developments in computing and AI have opened the door to the re-industrialization and digitalization of biopharma and healthcare, triggering a revolution where AI is starting to be applied to multiple aspects of the industry, from drug design and diagnostics, to healthcare delivery and even back-office functions.
Driving this transformation is a new wave of founders and startups that blend AI technology and biology in innovative ways. This convergence goes beyond traditional biotech and digital health, creating a broader and more integrated approach. We believe that a healthcare revolution is afoot, with a reshaping of how we diagnose, treat and manage diseases, as well as how we access, pay for, and deliver healthcare.
In the realm of drug discovery and development, AI is enabling personalized medicine by accelerating research. AI algorithms analyze vast datasets to identify potential drug candidates much faster than traditional methods, substantially reducing the time and cost associated with bringing new drugs to market. Companies like Atomwise (a portfolio company of Vickers Deep Tech Fund I) and Exscientia are at the forefront of this revolution, using AI neural networks to predict the binding of billions of small molecules to drug targets, thus speeding up the drug discovery process. Additionally, by analyzing genetic information and patient data, AI aids in developing personalized treatment plans that are more effective and have fewer side effects. For instance, companies like Flatiron Health and Tempus are leveraging AI to tailor therapies to individual genetic profiles, ushering in a new era of precision medicine.
AI is also revolutionizing medical imaging and diagnostics with improved accuracy and automated analysis, significantly enhancing patient care. Companies like Aldoc and Iterative Scopes are developing AI solutions that automatically detect anomalies in medical images, helping radiologists and oncologists identify critical conditions more speedily and accurately, and enabling resources to be channeled to the more complex cases. AI is also enabling preventative medicine, whereby AI-analysis of patient data can help predict the likely onset of diseases such as diabetes and cardiovascular conditions, enabling preventative measures and early interventions. AWAK Technologies (a portfolio company of Vickers Deep Tech Fund II) in Singapore has developed an FDA Breakthrough Device Designation AI prediction tool to help clinicians assess a patient’s risk of kidney disease progression and improve patient care. Roche recently released a real-time continuous glucose monitoring system featuring AI-powered forecasts of blood sugar levels. These advancements highlight the transformative potential of AI in healthcare, making diagnostics faster, more accurate, and more efficient.
Expanding the horizons of patient care, AI is transforming telemedicine and remote monitoring, bringing healthcare into the digital age. AI-driven telemedicine platforms like Teladoc and Amwell connect patients with healthcare providers regardless of location, expanding access to healthcare, especially in underserved areas. Additionally, AI can analyze data from wearable devices and sensors in real-time, offering actionable insights to manage chronic conditions. This real-time data analysis allows for timely interventions and personalized care plans, significantly improving patient outcomes. For example, companies like Boston-based Biofourmis uses FDA-cleared AI analytics to monitor vital signs and provide software-based medication optimizations following clinical guidelines to help decrease clinician burden.
As healthcare demands continue to surge over time, operational efficiencies and safety are paramount to ensure the delivery of timely and high-quality care to patients, and a safe environment for health workers. For instance, our portfolio company, Chooch AI, uses a computer vision-based AI solution to help medical suppliers and distributors enforce compliance with EH&S policies in medical warehouses, thereby enabling the prevention and early-intervention of bio-hazards and workplace accidents. Hospitals are also leveraging Chooch’s AI vision solutions to improve operational outcomes by automating the monitoring and re-stocking of medical inventory, ensuring that critical medical supplies are always available to clinicians and patient, while cutting down on ballooning excess inventory costs, which can account for 30% of annual hospital revenues. We believe that these represent just the tip of the operational improvement iceberg for healthcare providers and players, and that AI will play a key role in reshaping the industry.
AI has the potential to profoundly impact human existence, revolutionizing healthcare access and delivery, enabling personalized services in finance and education, and transforming transportation. It offers new opportunities and heralds a better future. While AI is undoubtedly creating significant value across various industries, the challenge lies in determining which companies and business models will ultimately capture this value. For instance, large language models (LLMs) like those developed by OpenAI and Anthropic are becoming increasingly commoditized, raising questions about their long-term economic viability as foundational model platforms.
The trajectory of AI's economic impact may resemble that of the internet, where many companies initially surged, but only a select few emerged as winners in sectors like social media, search, and e-commerce. For example, Google and Amazon captured immense value by building scalable, profitable business models around search and e-commerce, while many early internet companies with innovative technologies struggled to achieve lasting economic success. Achieving sustained value capture in AI will likely require continuous innovation in business models and products, as well as strategic timing.
As AI continues to evolve, investors must carefully consider which companies possess the vision and agility to turn technological advancements into enduring economic success. Regardless, AI’s integration into various sectors promises to unlock new efficiencies, foster economic growth, and improve overall quality of life, heralding a future where technology seamlessly enhances human potential and societal well-being. For investors, AI represents a field of immense potential and growth. By investing in AI, one is not only betting on technological advancements but also on the future of human progress and innovation.
