Just bought a small or medium-sized company. You’ve conducted your research and stayed ahead of rival deals, and have carefully stitched the needle to complete the deal.
The real work starts the process of improving the value of your purchase.
At the recent MIT Entrepreneurship Through Acquisition Summit, the panel of seasoned investors and entrepreneurs discussed how they’re growing their businesses and portfolios through the use of artificial intelligence. Here’s a review of three key points of the speakers.
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When you are evaluating AI tools, be sure to think like an investment manager from a hedge fund and not a VC
As an ex-venture capitalist, Mark Valdez is aware of the lure of a technology’s hype or the attraction of software companies’ rising prices for their stock. However, as the current chief executive officer of Eads Bridge Holdings, which acquires and helps tech-enable traditional, nontechnical companies, he’s cautious not to take too much risk. So when it comes to screening AI tools for acquired companies, he suggests adopting an approach of a hedge fund manager rather than one that resembles the venture capitalist who bets.
The first step to take in this approach is to assess the overall health of the company that provides AI tools. AI tools.
“Understand what could go wrong, because even big companies that raise lots of money, do lots of press, do all the right things — they go out of business,” Valdez declared. “You want to be thoughtful about the new companies that are coming out.”
He also recommended speaking to current customers and asking tough questions on sales calls with prospective vendors. “Understand how much capital the company has raised, who are the investors, what’s their business model, what do they think about the market, and what’s the road map,” Valdez stated.
After you’ve chosen the tool you’ll use then you can begin to experiment with it with small steps that won’t place the entire company based on a decision.
Find the appropriate task to use AI augmentation
Scott Barstow is a tech and operating partner in the software business with Pacific Lake Partners He said that when deciding what work could be improved by AI the four areas:
- Functional and operational areas that are part of business: The functional leaders of the company tend to be in charge of researching and suggesting innovative methods to utilize AI technology to address issues.
- Methods to boost value for customers by enhancing AI-enhanced goods and services: This is a process that is based on AI to provide small improvements. For instance, Barstow works with a firm that manages the job descriptions of large corporations. The company last year made use of OpenAI’s technology in order to allow its clients to enhance the creation of job descriptions using the other descriptions of jobs that OpenAI gathers and utilizes to develop its models.
- Innovative products: Typically made up of unique information already held by the business. Based on the same job description as an example the next step could be to tap into databases of job descriptions, and creating a brand new product based on the company’s proprietary data that current customers or new ones could make use of.
- AI-first companies: Barstow said that this is not typical in the entrepreneurship-through-acquisition space, as the ETA model tends to revolve around buying businesses that are 10 – 15 years old rather than young startups with AI at their core.
Begin small and add the input of your employees
If you’re prepared to commit to generating value using AI Don’t fall into the trap of adopting the all-or-nothing route, according to Linda Drabik who is a board advisor and co-founder of Marencik Solutions. Instead the AI and machine-learning expert recommends that leaders begin with specific applications.
“Deploying a proof of concept or pilot can save time and money in the long run because they focus leadership teams on making better use of data, fast-track a product or feature to improve customer experience or an internal process, and clearly measure value to drive decision-making for downstream tech investments,” Drabik stated.
She also advised entrepreneurs to stay clear of getting caught up in trendy tools, a point of view which was echoed by Valdez. “You don’t have to be the first adopter, but you don’t want to be the last one either,” he added. “Finding that point in time where it matches up for you is really valuable.”
Drabik stated that employees are often afraid that AI will take over their job and therefore it’s crucial that leaders openly discuss the role of AI in the development of the company. Stress that working with AI can be a great way to enhance the capabilities of your team by leveraging experts from the team. This will increase employee satisfaction and retention after acquisition.
Drabik also suggested looking into opportunities to utilize base models to swiftly incorporate AI into existing workflows and systems. Also, she advised, do not forget about the quality of data and its governance are crucial to the success of AI — issues which a thorough data audit can help with.
“In addition to offering a view of existing data assets, an audit can highlight opportunities to capture or transform more actionable data and insights, revealing the lift a new CEO can bring to an organization by responsibly applying AI,” Drabik stated.
Use cases that will provide specific value to your company.
At the intelligence-based company for automation of processes Beecker engineers employ AI to examine software code.
If you face an issue with coding within a small-sized company it’s possible for everyone to gather around a computer to tackle the issue According to Felipe Corcuera MBA ’18, Co-CEO and board member of Beecker. However, that’s not the case for a company that has 250 employees spread throughout all of the U.S., Colombia, and Mexico. Instead, Beecker uses ChatGPT as a digital assistant to address queries about the reason why a script fails or a message of error is constantly appearing on the screen, for instance.
“It’s almost like having a big brother next to you saying, ‘Hey, you should look at this or that, or make sure this variable is well defined in this other piece,'” Corcuera added.
This helps employees identify problems, Corcuera added. Instead of calling Chief Technology Officer for code errors an employee in junior grade could test the code using ChatGPT first. If the issue persists it is possible to raise the issue to the chief technology officer.
One of the first ways that editing or proofreading services Scribendi made use of AI was to take customer orders.
“We thought that the business had solid fundamentals and [that] AI could create additional opportunities,” said Enrico Magnani as a co-founder at the private investment company Magnum Capital Partners that acquired Scribendi in the year 2015. “I prefer to think of AI as an intelligent bike for the brain. Let’s suppose your brain used to walk and then you get onto a bicycle and a completely new world of possibilities opens.”
In the years following Scribe Ndi’s acquisition in 2004, the company introduced a grammar correction tool that was trained to aid editors in the editing of scientific papers, a tool that assists customers in choosing the right product as well as a third tool to make sure that orders were delivered in time. The company was eventually bought by Japanese Editing and researching the Japanese company Edan in 2023.