AI In Tech Investing: Separating Real Opportunity From The Hype
Ben Forlani is founder & CEO of Dedale Intelligence, delivering strategic intelligence to tech investors across Europe and North America.
Artificial intelligence (AI) has been called a once-in-a-generation technology shift, and it might well be. But for investors, especially in 2025, AI is as much a source of uncertainty as it is of opportunity.
At Dedale Intelligence, we’ve integrated AI considerations into every single investment assessment we conduct, whether we’re evaluating a sector or a specific vendor. But the reality is, despite the noise, much about AI’s true impact remains unknown. That’s why our first guiding principle when approaching AI-related opportunities is simple: humility.
Humility First: Acknowledging What We Don’t Know
Investors are used to making forecasts. But when it comes to AI, the timeframes and scale of disruption are extremely hard to predict, especially when we need to think not just about a five-year holding period, but also the next investor’s five-year cycle. That’s essentially trying to anticipate a decade ahead in a market that’s evolving monthly.
In some cases, even after due diligence, the conclusion is that we simply don’t know. I recall a recent case in construction technology where our team assessed both the potential for AI to accelerate the vendor’s growth and the risk of new AI-native competitors. Our conclusion, shared transparently with the buyer, was that the uncertainty was too high to justify the investment at that time. That level of caution can save capital and focus.
Assessing AI Disruption Risk: Who’s Most Exposed?
From our market mapping, two patterns stand out:
SMB-focused software is more vulnerable.
Products aimed at small and mid-sized businesses are often less complex with lower customization needs, making them easier for new AI-driven vendors to replicate or improve upon quickly.
Vertical and enterprise software is more insulated, for now.
Deeply specialized, highly configurable solutions are harder to disrupt in the short term. That complexity buys incumbents time to integrate AI themselves and protect their market position.
AI disruption risk is particularly acute in horizontal markets like marketing tech, sales tech and digital experience, while deeply verticalized solutions tend to be more defensible. Timing matters: some markets may be hit within two years, while others may take five or more.
Avoiding The Hype Trap
During Covid-era investing, we saw the dangers of chasing trends without a sustainable business case. AI has the potential to transform products, operations and customer experiences, but not every AI-branded company will succeed.
The most disciplined investors are focusing on:
• Evidence of AI integration that genuinely improves outcomes, not just press-release announcements.
• Barriers to replication, such as proprietary data sets or unique workflows that make it harder for competitors to match capabilities.
• Clear monetization pathways, ensuring AI features translate into customer value and revenue.
High investment in generative AI doesn’t automatically translate into proportional returns. Instead, it’s important to work toward turning AI adoption into measurable productivity and profitability.
AI As A Portfolio-Wide Imperative
Even for investors who aren’t putting money directly into AI-native startups, AI still needs to be considered on the agenda. We’re seeing leading funds:
• Hire dedicated AI specialists to support both due diligence and post-investment value creation.
• Push AI adoption roadmaps across their portfolios to drive operational efficiency, product enhancement and customer experience gains.
• Treat AI enablement as a new form of portfolio support, much like go-to-market acceleration or talent strategy.
The rationale is simple: every company in every portfolio will likely be touched by AI, and AI adoption is already reshaping business processes across industries.
Looking Ahead: The Must-Have Change Agenda
From automating internal processes to unlocking new use cases, AI’s reach will only grow. Investors need to:
• Understand sector-specific disruption timelines.
• Prioritize defensibility and adaptability.
• Ensure that portfolio companies are building AI change agendas now, not when it’s too late.
The hype will come and go. I believe the winners will be those who stay grounded in fundamentals, are clear about what they can and can’t know and use AI not just as a bet, but as a disciplined tool for value creation.
The information provided here is not investment advice. You should consult with a licensed professional for advice concerning your specific situation.
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