Walther Doernte talks about the exciting developments in AI and defining your approach to early stage investing

Author

UK Business Angels Association

31 October 2019

Walther DoernteArtificial Intelligence (AI) is growing rapidly and the past 12 months there has been significant advancement in a number of sectors including healthcare, manufacturing and agriculture. UK artificial intelligence companies secured over £800 million in the first six months of 2019, making the UK the third biggest market in the world for AI behind the US and China.

London-based angel investor Walther Doernte has developed an interest in AI foreseeing even bigger advances in the coming years.

“I believe that the trajectory of technology development is increasing at an exponential rate and the next 10 years is going to make the last 10 look almost quaint. Underpinning this will be advancements in artificial intelligence, where we move from simple applications of predictive analytics and machine learning to proper intelligence. This next wave of innovation is going to be extremely exciting and it’s going to change the world in so many ways.”

After leaving behind a 15-year corporate career, Walther began his angel investing journey. The decision was borne out of a desire to move away from the highly politicised corporate environment he’d been working in to something faster-moving. Walther explains:

“I wanted to work in a more agile and fast-moving environment as well as be more involved in innovative technology – that led me to working with and supporting entrepreneurs.”

Sharing his initial reservations about becoming an angel investor, Walther says:

“As an angel, you are by nature investing at the earliest stages, which of course carries with it extremely high risk. My biggest fear was if I could spot the winners. The starting point to minimizing this risk is to take a portfolio approach of investing in at least 20 companies.

Determined to further navigate those fears, Walther found it useful to take advantage of the wealth of information out there from the tech community. Pointing to books, blogs and podcasts where prominent tech investors share their investing approach as a rich source of information, Walther also believes that developing your own community of investors is helpful.

“But I would say just as, or even more, important (than using the available information online) is surrounding yourself with experienced angel investors and syndicates from whom you can learn. When I began investing, I quickly found a few experienced angels and I watched closely as to how they would conduct due diligence, what they looked for and what their process looked like. It’s important to learn as much as you can but also over time to develop your own style and process.

He has also found that being a member of the UKBAA has helped him build his network.

“Angel investing can be a very lonely activity so it’s important to build out your network and become part of the early stage ecosystem. On the one side to generate strong deal flow but also to share in the due diligence. The UKBAA stands in the middle of the UK early stage ecosystem and plays a huge role by bringing together all the different stakeholders and facilitating communication and networking between those different parties. Roderick (Beer) and the UKBAA have led to extremely helpful introductions. I think it’s hugely beneficial.”

“I believe that the trajectory of technology development is increasing at an exponential rate and the next 10 years is going to make the last 10 look almost quaint. Underpinning this will be advancements in artificial intelligence, where we move from simple applications of predictive analytics and machine learning to proper intelligence. This next wave of innovation is going to be extremely exciting and it’s going to change the world in so many ways.”

That led Walther to honing his own approach to angel investing by watching what those around him were doing and developing the areas where he felt his approach could be improved. As he began his journey, he also stayed within FinTech and InsurTech, two areas that he had experience in.

“When you first get going, it’s important to begin in the sectors or industry that you know best as your knowledge will help you make better investment decisions. that’s also going to be where you can provide value in the form of expertise and network, not just capital. But once you start to get comfortable it’s equally important to branch out. Not all the best deals are going to be in the same sector.”

Walther’s increased focus on AI is something that has happened organically following the investments he’s made as an angel investor so far.

“A little more than a third of the start-ups I’ve already invested in are using artificial intelligence and machine learning as an integral part of their business. It’s something I’ve decided to focus most of my energy on now.”

With his experience and interest in AI building, Walther is excited about what the future will bring. He shares:

“So far, the biggest uses of AI, or more specifically machine learning has been in serving you ads for things you don’t really need. What I find really exciting is the potential for its application in things like mobility, robotics and health care. The UK has a competitive advantage in AI, with its world leading universities, research facilities and some early start-up success in the field. This has led to a strong AI ecosystem, take health care, there are a number of exciting early stage start-ups in the UK tackling things like disease diagnosis, drug development and surgeon augmentation. I think, as early stage investors, we have a golden opportunity in the UK right now for AI.

Walther’s advice to other early stage angel investors is to be prepared for change and pay close attention to the founders and their team.

“Investing at the pre-seed and seed stage means many companies you invest in are pre-revenue and pre-product market fit. At this stage, so much can and will change about the business. The product can change, the route to market can change, these changes can be minor but also sometimes they can be a complete pivot. For me this means, that the most important factor is the team – Are they passionate about the problem? Do they work well together? Do they have the ambition and vision to build a big business? Are the flexible and humble so that when change is needed, they don’t move too slow.”

Want to learn more about angel investing? Enrol in our The Effective Angel Investor E-Learning course at https://bizangels.thinkific.com/.

The UKBAA presents the 2nd Future Forward, on 27th November 2019, join us and explore the future of early-stage investing across some of the fastest growing sectors. Get tickets at https://www.futureforwardukbaa.org/

Find out more about the benefits of becoming a UKBAA member at https://www.ukbaa.org.uk/membership/.

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