Viktoriya Tigipko is one of the most recognized names in the Eastern European VC community and is a native of Ukraine.
She runs TA Ventures, a pre-seed and seed stage VC, since 2010. Additionally she founded iClub (an angel network), WTech (a community for women in tech), and is Chair of the Board at the Ukrainian Startup Fund.
Guest Author: Viktoriya Tigipko
I was looking recently at some of the materials from the Coatue EMW (East Meets West) conference and was intrigued by some of the insights they presented.
For those of you unfamiliar with who Coatue is… they are a well-known investment firm that focuses primarily on technology, media, and telecommunications (TMT) sectors.
Ok so let’s dive into some of these insights.
AI powered the market in 2024
Coatue sends a survey out to key decision-makers each year and they use this to help make predictions about the market. In 2023 they asked whether the market had bottomed.
- 49% of respondents said that the market would drop further in the coming year and an additional
- 39% thought it had bottomed but were going to play it conservative
- Only 12% thought the market would make new highs.
But this 12% ended up being right.
Nasdaq went up a further 30% since last year’s survey while a special “AI Basket” of companies have gone up 51%.
This AI Basket consists of companies like Nvidia, Meta and Google who are all making significant investments into AI.
AI as the next platform shift
The idea that AI is the next platform shift is not new to anyone. Basically everyone is saying it at this point.
But what I found interesting here is that Coatue essentially believes that AI will be a ‘Super Cycle”. Meaning that instead of just being a bit taller than the Cloud/SaaS wave, they think it will instead be a lot bigger.
As you see in this chart below.
Plus each subsequent wave will have a larger and larger gap with the previous one. For a tech investor like me… this has massive implications.
But first why do they think this?
Well have a look at the preceding waves and think about it… things like Cloud and Mobile all had a huge impact for sure. But just how much did they change the game?
They essentially changed the quality + form factor for how we consumed the Internet and in doing so opened up profitable new business models.
But AI goes well beyond form factor. AI allows you to solve a far wider array of problems. Things like Cloud and Mobile did not achieve this.
And so in a way, this AI foundation will make everything from here on out much more impactful.
The Coatue framework for AI S-curve
Basically their view is that there will be an S-curve to AI adoption. Right now we’re more or less in Phase 1.
The main winner in this infrastructure phase was Nvidia. And since January 2023 approximately $6 trillion in market cap was added as a result of this phase.
But they also make an important point that AI infrastructure goes well beyond just semiconductors. It includes things like memory, networking, Edge AI, utilities to power it all, etc.
And so we are far from seeing the full extent of value creation from this phase.
Plus we are still only in the very early innings of seeing the benefits of phases 2,3 and 4. Once those phases are fully realized we will see many $trillions of market cap being added to a wider set of companies.
In part because the ‘winners’ of those phases are likely to be a lot more fragmented than the infrastructure phase where the table stakes in terms of capital is far higher.
Eventually this value needs to trickle down to the users
The way I like to think about this is that phase 1 in this S-curve has essentially been like stocking up on ammunition.
Companies like Meta, Google and Microsoft bought tons of expensive chips from Nvidia to be able to fight the many battles that are coming in phase 2-4.
And it is in these battles that we as the consumer will really see the game changing services that AI will enable. Because let’s be honest, till now most of us haven’t changed how we work much because of AI.
Sure, we use ChatGPT and do some things differently… but I’d argue that the vast majority of us have not changed the core way in which we work very much. And that part is coming.
That part is what makes me as an early stage investor very excited.
AI Funding is accelerating
I am clearly not the only one that is excited. All my peers are excited as well as you can tell from this chart above. lol
They know that many $trillions in market cap are going to be created and only a small fraction of that will go to the tech titans like Microsoft, Google and Meta.
Rather lots of new players will be created. Players that will go deep on specific niches and solve problems in those niches in game changing ways.
And solving those problems will even change which companies are the leaders in those niches/industries.
The guys that don’t invest and don’t ‘get’ this AI shift will likely be the Blockbuster Videos of tomorrow.
Some final thoughts
I hope you are as excited as I am about what is going on with AI right now. It doesn’t matter if you are an investor, a startup, or just someone that is interested in how all of this is going to change your life.
If you’re old enough… just try to remember what it was like before the Internet. Or if that’s before your time imagine if there was no Internet.
Imagine how different your life would be.
Now think about this… in 10 years or so when you look back at how much your life has changed due to AI… it will likely make the Internet look small in comparison.
Literally, everything you are doing today will have changed. And the names of many of those players that are delivering those new AI-enabled services will be completely new ones.
That is what I’m excited about. And that is what I think you too should be very excited about once you fully digest just how big this is going to be.
