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Would you entrust your diligence work to the machine?
The craze for generative AI today is like the hype around daily deal sites. Remember, Groupon, LivingSocial, One Kings Lane (for home accessories) and Gilt Groupe (for fashion). They were selling items at a discount, or offering daily deals. It was the new way to shop and all these companies were at one point worth well over a billion dollars. Then reality set in.
Seems to me this same investor herd mentality is happening in the generative AI space. From content creation to advanced analytics, its use cases seem boundless, with all these startups carving out footholds in their little niches. Still at its early stage, there is no lack of reasons for caution, such as bias and inaccuracy of the machine’s output, its time-saving and productivity seem to outweigh many concerns.
Here’s a startup applying generative AI to private investing, speaking of things one would be super careful about. Called Helix by HL, it recently scored an additional $6 million in seed capital. The company is building an AI assistant for advisors and investors “to navigate the private markets with more confidence.”
Investing with AI
Fintech venture capital firm FINTOP Capital in Nashville led the Seed+ round. With the new funding, Helix has reached a valuation of $26 million.
Launched just in June 2023, Helix is a joint venture of AI wealth platform TIFIN and Hamilton Lane, a global investment manager for private markets. Basically, Helix is powered by the combination of TIFIN’s AI investment technology and Hamilton Lane's data and industry expertise. It seeks “to simplify alternative investing and empower wealth advisors with the tools and insights needed to navigate this complex asset class.”
Helix offers a conversational AI experience with a focus on investment questions and advisors’ communication with clients. Why you would use it: saving time and resources for discovery, benchmarking, and forecasting, while also getting comprehensive diligence in private markets that are otherwise complex and lack standardization.
"We believe that data-driven decision-making can help deliver superior investment results for investors around the world,” Hamilton Lane’s Griff Norville said in a statement last week. “Through the creation and application of Helix by HL, we aim to empower the growing set of wealth managers and other private wealth professionals allocating to the private markets."
As a child of J.P. Morgan-backed TIFIN, which is building AI-powered platforms for fintech companies, Helix is built to be integrated into wealth platforms and digital marketplaces, rather than offering its own platform for use alongside investment software.
The new capital will help Helix expand in the market, as well as boost its product development and platform features, according to the official release.
TIFIN’s founder and CEO Vinay Nair said in a statement: “We are thrilled to announce the addition of FINTOP to our capital partners and look forward to their contribution towards our goal of making Helix a must-have for all users of private investments.”
Are banks prepared for generative AI?
For FINTOP, the investment in Helix is part of its strategy to democratize access to alternative assets for banks. While fintechs have been flexible with AI adoption, banks have been treading slowly, adapting a cautious interest. To name a few standout cases, digital-only bank Ally Financial raced to the forefront of the innovation, employing AI for marketing and customer communications. In latest news, Spanish CaixaBank is developing its own generative AI for internal processes and customer relations.
Naturally, there are pros and cons to letting generative AI roam in the financial services space. Against the backdrop of recent OpenAI drama, bankers around the world are assessing the risks and predicting swfit changes in their space.
In a late September report, Thomson Reuters highlighted among the risks the appearance of synthetic businesses – nonexistent companies sourced from machine-made documents. However, the same generative AI technology can be used to analyze documentation at scale and pinpoint suspicious activity to detect fraud.
There is no putting the genie back in the bottle. Once generative AI was out for public use, it was a matter of time before it was everywhere, both its benefits and risks surfacing here and there at breakneck speed.
To turn to Thomson Reuters again, “Financial institutions should approach AI adoption with a comprehensive strategy that includes addressing biases, ensuring data privacy, complying with regulations, and maintaining transparency and accountability.”
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