As Eleven’s Director of AI, Petar Petrov’s mission is very clear: to help people understand AI and use it where reasonable. In an interview with The Recursive, Petrov discusses which AI technologies he considers the most promising, what role AI plays in Eleven’s investment strategy, as well as what is the potential that startups of AI can have on our economies and our societies.
Petrov also showed boldness prediction it is slowly becoming reality, and that is that every company is starting to use some kind of AI in its operations.
The following interview was conducted as part of The Recursive’s “State of AI in CEE” report. Download the full report with insights from over 40 experts and analysis of 900 CEE AI product companies here.
The Recursive: What types of AI technologies or applications do you see as the most promising for investment in the near future?
Petar Petrov: The future of work through lower barriers to entry and healthcare through abundance of data.
How many companies in your portfolio develop and sell AI-based software or hardware products? Can you give some of the most successful examples and why do you consider them exemplary?
A majority of our companies use AI in their products. Sensika is an AI-powered media monitoring platform that sifts through large amounts of data across various media channels, organizing it into user-friendly folders, dashboards, and news feeds. The company uses AI to perform complex tasks such as sentiment analysis, social listening, and consumer intelligence with high accuracy.
In 2022, Sensika raised new funding that allowed the company to strengthen its analytics division. The team began using ChatGPT to condense analytical reports and replace the traditional approach of manually reading and analyzing multiple articles to find commonalities. Taking advantage of the latest AI opportunities, Sensika increased its product capabilities and created an AI-powered topic categorization and grouping tool, as well as an AI-powered morphological query expander.
How do you assess a startup’s AI capabilities when considering an investment? What role does AI play in your investment strategy at Eleven Ventures?
Artificial intelligence is quickly becoming a universal lever that helps individuals and businesses achieve higher, more complex goals for the same resources. In this sense, AI plays an important role in our investment strategy in two different ways:
- We research and invest in companies that provide AI solutions. Naturally, these companies offer great leverage to their customers and therefore have a greater chance of product-market fit and positioning themselves correctly. For these companies, we are looking for AI development, which goes beyond just implementing AI API calls. We would like to see technology built in-house that is non-trivial to reproduce and provides at least reasonable protection against copiers.
- The second part of the AI investment strategy is a general rule we believe in: the more AI a company employs, the more effective it is, and therefore the more likely it is to succeed. And by “employ,” we mean that it has built internal tools or uses external tools to improve product performance or employee productivity.
How do you support your portfolio companies in implementing and optimizing their AI strategies? Can you share an example of a successful AI implementation in one of your portfolio companies?
When it comes to supporting our portfolio companies, we focus on two main areas.
First, we offer expert advice to help these companies use AI in their core products, where it makes sense. Adding AI can improve their products and give them an edge over their competitors. Our extensive experience of the sectors in which our startups operate allows us to effectively define their strategies. Additionally, we help businesses execute practical tasks by leveraging our expertise and acumen to improve their internal capabilities, while facilitating connections with valuable external resources.
Second, we help businesses improve the way they work using AI tools in different areas such as marketing, sales, customer service and finance. Here, it doesn’t matter what the company’s main product is: using AI can help it work faster and stay ahead of the market. We achieve this by developing comprehensive turnkey processes that startups can easily implement for training, internal communication, toolchain setup, employee management and establishing effective feedback loops.
How do you assess the potential impact of an AI startup or company on society and the economy?
Assessing the potential impact on society is rarely an easy task. Basically, there are two elements: size and quality.
When we talk about size, we always try to make an estimate of the addressable market and possibly the share that can be captured by the startup. No one knows if the startup will succeed, how it will scale, whether it will capture the predicted market share, or whether it will pivot. But at least we start from some relatively objective market figures.
Quality is the other component of the estimate. Usually we know quality because we know the effect the startup has on a person. Since startups work with a specific problem and solution at hand, there are rarely any surprises here.
So if you look at the size and quality of a specific startup’s impact, you can get a general idea of how big that impact is. And if you could measure quality impact in a specific amount, you could then quantify that impact financially.
What are the biggest challenges facing AI innovators in the CEE region when developing AI-based research, products and services?
AI innovators struggle due to resource constraints. This has always been the case, but in the field of AI it is especially true.
Here we can talk about constraints related to talent, money, scale, infrastructure and tradition.
And these are universal limitations, but in the CEE countries just a little more than in the US or the western EU.
Where do you see the biggest opportunities for AI startups and companies over the next 5 years?
AI appears to be fairly industry and size agnostic. The only real differentiator for AI is data. So if a startup can generate or use data efficiently, it’s definitely a bigger opportunity.
How do you approach ethical considerations when investing in AI startups?
One of the founding principles of 11 is integrity. So, in everything we do, we seek integrity.
If they do something unethical, we don’t invest.
What impact do you think AI regulation will have on the venture capital industry and AI startups?
Regulations will certainly stifle the growth of AI, but the question is: “to what extent?”
The United States seems to be quite lenient on regulations, so the AI ecosystem is going to evolve at full speed.
The EU, on the other hand, is preparing for a more restrictive regime, which will undoubtedly make it more difficult for startups to compete with their American counterparts.
There are a lot of questions and time will tell how the pieces will come together.
What opportunities do you see for cross-sector collaborations or partnerships in AI innovation in our region, particularly regarding venture capital investments?
Every company will be an AI company. Powers products across all verticals.
In your opinion, which sectors will be most impacted by AI in the next 5 years?
Once again, all sectors will be affected by AI. If we have to draw a conclusion, however, we could make the case for health care: there is ample data, considerable impact, economic implications and tangible results.
In your role as Chief AI Officer at Eleven Ventures, how do you see the integration and application of AI technologies transforming decision-making, risk assessment and overall strategy within the capital industry -risk ?
All of these areas will be profoundly transformed by AI. However, the process will take time because it is data dependent and it takes time to select data, purchase data and organize data. Then there is the process of exploiting this data via internal or external tools. Finally, testing and interactions.
So integrating AI will be the way forward, but it will take time before it starts to have a significant impact on all decisions.
Which factors will have the greatest impact on improving prospects for AI-based innovation in the CEE region?
Regardless of the region, overcoming resource limitations will be vital.
- Funding AI through programs and funds
- Growing talent through programs and universities
- Raise awareness of the benefits of AI
- Build infrastructure to leverage AI and increase scale.
We can’t do much about tradition, but we must develop it.
And of course, regulation that will negatively impact the growth of AI, at least to some extent.