Introduction

Well, thank you for sticking around and joining us for our final session.

Understanding Impact Investment and AI

We're going to be talking about impact investment and AI.

Guest Background in Impact Investing

Would you like to tell a little bit about your background and how you got into impact investing and who you are? Sure. Hello everyone. Glad to be here and thank you for coming.

I'm Filipe Portela. I'm an entrepreneur, ecosystem builder and investor. I got into impact investment via a newspaper ad. If you can believe it you're looking in the classifieds and you're like Not at all. It all started back 12 years ago exactly 2012 and I was just browsing the newspaper in paper. Okay still in paper and Suddenly there was like their mid page. Sorry half page ad and for a private foundation. And they were looking for an executive director. They were a private foundation. They wanted to do social business and impact investment. And that just stuck with me. So social business, what is this? Impact investment, what is this? So I got really curious. I googled them. I searched for them. They didn't exist anywhere. So I sent my CV. I want to meet them. I want to know what this is. I wasn't even looking for a job, to be honest. But I got really curious about it. So I sent my CV. A couple months later, they called me. And they wanted to meet me. And I went, of course, to meet them. And the truth is that I really got excited. I really got in love with it. about the topic. There was no foundation, by the way. It was just a name. There was nothing. They had like a name and a 50 square meter office here in Lisbon. I was living in Porto, by the way. 1And the truth is that a week and a half later, I was in Lisbon. backpack with nothing just a handshake and a blank sheet of paper to start a private foundation on social investment and an impact investment and that's how i got into the world a handshake a empty office a name and a blank piece of paper i mean that that sounds like to start any great adventure a dream come true basically Amazing.

AI's Influence on Startup Assessment

And I mean, of course, like, obviously, this is a AI event. And so I want to get into a little bit about how have you feel AI has changed the way that you look or assess startups that you're considering making an investment in? You know, how can how do you look for them to try to find the ones that are really going to create that long term value, and aren't just going to be overtaken by bigger tech players?

The truth is it hasn't changed, basically. So AI has helped a lot, but mainly on the operational side of things. So I and we do take a lot less time now with operational daily activities.

So for instance, now I can do an investment memo with a voice memo of 10, 20 seconds and it builds everything for me, right? So that kind of stuff is really improved, really faster.

The thing is I mainly invest in early stage companies and early stage founders and AI is a lot about data. So you don't have a lot of data on early stage companies and early stage founders. Yeah, there are a couple of solutions, there are a couple of tools that we can use, we can scrape, we can work with data. The truth is that at the end of the day it's still not the quality that we need to make a decision.

1So far, I've been using a couple. Not sure if I can tell you that, okay, I've made or I found out a specific founder or company because of AI. Still at this point. Yeah, I've looked at the different ones, but yeah, I don't think I have made the investment decision because of AI or I found something that I wasn't going to find any other way because of AI.

AI and Decision-Making for Investors

And then if you look at it from, okay, from the moment you invest, you're supporting that company, of course, there's always points in time of which you have to make a tough judgment call. Do you continue to support that company or do you cut your losses and maybe move on from it? Has AI impacted the way that you support these companies or the way you make those sort of decisions at all?

Not yet. No, not yet. Again, AI has helped a lot on the operational side of things. Even for the portfolio companies, it helps a lot because it takes time for their reporting. For instance, it's way streamlined, it's way easier, faster.

Again, in the end, it's people dealing with people. So that kind of decisions, no, not yet. It doesn't, I'm not going to say, it doesn't even help. I'm going to say that. So AI, in my case, and I assume the majority of investors, It's great for the operational side of things, not so much for the other decisions, or I hope it's not being used for the other kind of decisions. 1Again, especially on the early stage where it's more like, it's a mixture of science and a bit of art also, because you have a lot of subjective stuff that AI is not going to pick up yet, at least. And I mean, of course, that would also bring a lot of different ethical issues or bias issues in terms of the data sets those AIs are trained on. So I can imagine, especially for early stage investment, you're like, okay, maybe not yet at least.

Evaluating AI Use in Startups

But then from the perspective of looking at an organization, looking at a startup, are there things like, I'm sure you've seen more and more pitches with AI included. So are there some red flags that you notice or green flags that you notice when it comes to startups talking about how they may or may not be using AI in their org? Definitely.

So a green flag is definitely when they are using AI or machine learning or AI tools. And they don't mention they are an AI company. That's definitely a green flag. That's great.

1Red flag is definitely when, okay, they, I don't know, they use chat GPT and they call themselves an AI company. That's definitely a red flag. I don't know any investor, decent investor I'll say, that wants to invest into a chat GPT mask, at least. doesn't make sense to do something like that. So whenever a startup tries something like that, that's definitely a red flag.

And then, of course, ethical issues. We could be here all night speaking of that, data usage, where the data comes from, all of that. So it's huge implications. I think we are still on the tip of the iceberg.

And out of curiosity, have you noticed a difference in quality of pitches now that ChatGPT is around? I mean, we just saw some good prompt engineering there. Has there been any change? Is it about the same quality? Are people mostly not ballsy enough to go out and just give you a ChatGPT generated pitch? No, it happens, for sure. No, it happens.

I'm not saying if it is better, because again, content is not what you are looking for, but quality of content, okay, yeah, it's better. Not better companies, because that's made of people and what they are actually building. But I would like to see even more usage, to be honest, even more usage of ChatGPT or other tools. Because for me, they are learning tools also. So whenever they are improving their content, their quality, their materials, they are improving themselves. So I'm expecting to see even more people and founders use it. I'm not against it, for sure. I'm just against it if founders try to sell something that they are not.

Apart from that, go ahead, do it, go crazy, use ChatGPT, MeJourney, Llama, Cloud, whatever you want to use, just go for it. I've learned so much using these tools and I hope that the founders do the same. Nice.

The Future of Industries with AI

And so then going forward to sort of the industries that you invest in as an impact fund, what do you think are some of the industries that are benefiting the most right now and being able to do more things because of these advancements that have come about? And definitely there are new areas and new sectors that are coming up that we were talking about them for the last five to ten years and they were there, but they weren't picking up. And now I'm sure that they will, like space, like new materials, like bioengineering. So all of these, that requires a lot of that.

Medtech, health. health startups. So a lot of companies that needed data and needed to work with a lot of data, I'm sure they are going to pick up and to grow a lot. And especially also impact companies, especially related with population data or migration, crisis, whatever. Because now anyone can work much better and with much bigger data sets. So I'm seeing already and I hope to see much more and better companies being made on those fronts for sure.

Personal Experiences with Practical AI

And within your own personal experience, what was an aha moment for you when you really saw practical AI, generative AI do something for you that you maybe weren't expecting that it would perform as well or that you would be able to use it in that case? Was there a moment that it really clicked and you're like, oh, wow, this could really change some things that I've been doing in the past?

only one oh my god no you can have many as well there's no quantity limits no yeah definitely when when chat gpt started to become available to the public that was a game changer for sure and then all the models that came after that and even this week the new model of chat gpt it's amazing how fast this is moving and i think the limit is definitely It's going to be either our imagination or regulation. I'm not sure what's going to come first.

I'm definitely a fan of regulation. I hope we just don't kill the advancements we are getting to with the regulation we are imposing on it.

So just answering your question, it's really hard to just choose one. But definitely every time we get a new model coming out, it just pops up new ideas, new possibilities. And again, the productivity increase, it's really amazing.

A year ago or a couple months ago, I couldn't believe, again, just the practical example of the investment memos. Doing an investment memo, a really good investment memo with a 10-second voice call, voice recording, for me it's perfect. It's a lifesaver in that sense.

So, yeah, I'm just hoping to see what comes next. even with video for instance or even pictures which is not my area in that sense but I'm really excited with that also on the creativity side. Yeah, sometimes it's just cool to see fun things.

Like we had a talk at one of the last ones at the London one of which she just made a EDM dance mix soundtrack to the Mindstone community as a theme, which ChatGPT generated lyrics. And yeah, it's like, okay, where would this actually get applied and work? Maybe, maybe not so often, but I think those moments are good for inspiration because yeah, sometimes you never know how you can apply it.

in your own realm when you're like, oh yeah, actually I saw something wild and creative, maybe there is something I can take from that and actually apply it in my workflow. Even now, just before this, I was talking here with a colleague and he was sharing about a project in Brazil where they are, actually the state is building a model, which basically what the model does, it creates the history of a specific politician. And basically shares, so it's public in a sense, but all the main contracts and decisions that politician made. So what will happen and what is happening is, so if a specific politician makes too many deals with the specific company without a specific reason, well, what is happening here, right?

And that, for me, it was a pop-up moment in that sense because, okay, yeah, great, that's great for... corruption, because we don't need laws. We need transparency. And suddenly, if we bring transparency to the table, they will think twice before actually doing something, right?

Importance of Explainable AI in Investments

Yeah, and I mean, explainable AI is such an important and big topic. Is that something you look for in the companies you invest in? Is that important?

I mean, I know you're very early stage, so they may not have it all worked out, but still with the ease of adoption, they are implementing it much faster than traditionally. It's definitely a topic of discussion, but again, early stage companies, impact, much more the concern is around the business model and that the founders have the right mindset. and the impact will follow. So what I'm trying to say is we cannot focus on too many things at the same time.

So it's definitely a discussion we have, but it's much more important that they have a business model with impact. And if they can fit the ethical AI, explainable models, all of that, perfect. If they can't, OK, don't worry. You will someday.

But it's definitely a discussion. That's what I want to say.

Have you seen anyone sneak in some GPTs or agents as part of the team? No, of course not. No, it never happens.

Looking Forward: AI and Impact Investing

All right, I've noticed we're about the time, but I just wanted to ask one last question of sort of what are you hoping for from the future with new AI advancements and how it might be able to help you as an impact-funded investor to make better decisions or to even maybe measure the type of impact that the startups you invest in have? Because that's, of course, always a tricky subject in terms of how do you measure if it's working and creating the impact and the social good you're looking for.

Yeah, for me, AI as a whole is like it's a tool, right? And as every tool, it has a great potential of doing good or doing bad. I hope we use it for the good side of things, definitely.

And I hope AI will open new doors that we are not even thinking about right now, especially on the impact sector. I call it impact sector because I believe that in a couple of years, There won't be business and social business or sector and impact sector. I think it will be all impact sector, basically.

I used to say, five years ago, I used to say it was going to take 30 years. Now I say it's going to take Half a dozen years, probably. Let's see.

But looking forward, that's what I hope, that AI is used for good. And definitely like these examples, it democratizes access to technology, to knowledge, that more founders... I do believe that soon enough we will have... one billion dollar company whatever that means that it's done by two or three people something like that you know so i do i do hope we get there and we we build good tools for the for for all of us for the for the society absolutely thank you