Tuesday, 13 February 2024 04:50 PM
Company Update
WASHINGTON, DC / ACCESSWIRE / February 13, 2024 / It's now been a little over a year since OpenAI launched ChatGPT, catapulting artificial intelligence into the public consciousness and igniting a frenzy of AI investment hype. As the dust settles on that crucial moment in the cultural and economic trajectory of AI, investors are trying to discern where the hype ends and the real value begins.
While most are in agreement that AI will change the way we live and work, it can be more difficult to pinpoint exactly which AI companies and services will be at the forefront of that change. For Ben Miller, CEO of direct-to-consumer asset manager Fundrise, this challenge points to a different kind of strategy: investing in the data infrastructure that will power the evolution and mass adoption of AI, regardless of how that evolution plays out.
"There are companies like Dbt Labs and Databricks, and those companies are the ‘picks and shovels' of the gold rush," said Miller in an interview on Real Vision's "Daily Brief" podcast.
"They're the most important foundational technologies of what's happening, and that's why we invested in them."
The Fundrise Innovation Fund
With the launch of the Fundrise Innovation Fund last year, Miller is targeting private tech companies that could be foundational to the evolution of AI for years to come. The goal is to provide retail investors with the opportunity to pursue venture-style investments in these companies before they go public, an opportunity traditionally only available to venture capital funds and ultra-wealthy investors with the capital to support early-to-late-stage startups.
"Our whole business is to break down the barriers between the public and private markets," said Miller. "We allow individuals to invest into private real estate. We also let individuals invest in private tech. We have a fund that anybody can invest into private tech companies."
So far, the fund's focus has been on data and AI. Databricks and Dbt Labs are two of the leading providers of the massive, complex data infrastructure that enables large language models to train on unstructured data such as text, audio, video, and images.
"As more companies seek to do more advanced things, more often, with their increasingly large datasets, they will inevitably run up against the limitations of traditional approaches to transforming data and seek out a better way with Dbt," reads a letter to Fundrise investors announcing the fund's investment in Dbt Labs.
"Dbt allows teams to take raw data and refine it into an end state that enables companies to do something useful with it - such as personalize their customer experience, generate sales and inventory reports, or train their own AI and [machine learning] models, to name just a few examples."
The investment in Dbt Labs follows the Innovation Fund's $25 million investment in Databricks, which represents roughly a quarter of its portfolio.
Databricks provides a comprehensive ecosystem where teams can process, store, clean, and analyze large datasets. It's essentially a unified analytics platform designed to simplify the daunting task of managing and deploying large-scale data and AI solutions. The platform enables users to develop generative AI applications that require large datasets to train and allows users across an organization to glean insights from data using natural language.
"To be able to get Databricks now and own a chunk of that company is just so exciting, and they are integral," Miller told Sam Dogen on "The Financial Samurai" podcast.
"It's a different risk profile. You're not taking an ‘Is this company going to be successful risk.' You're taking a ‘How much are they going to grow risk.' And I think they're going to grow a lot."
The State of Data and AI
It's worth contextualizing Fundrise's investment strategy in terms of recent trends in the development of AI and data services.
As companies prioritize more data science and AI initiatives, there's a strong focus on data integration products. According to Databricks' 2023 State of Data + AI report, 50% of the fastest-growing products fall under this category. Leading in this area is Dbt Labs, experiencing 206% year-over-year growth in terms of customer numbers. Data integration is also identified as the fastest-growing market in the Databricks Lakehouse data management platform, with 117% year-over-year growth. This shift reflects an industrywide trend toward more advanced data use cases beyond the traditional business integration tools.
The report also notes that a significant portion of Databricks' customer base, about 61%, is shifting away from on-premises and cloud data warehouses. This shift is coupled with a notable 304% year-over-year growth in the volume of data in the company's Delta Lake, yet another data repository.
The data lakes provided by Databricks provide centralized repositories to store structured and unstructured data at any scale. Users can store data as-is, without having to first structure it, and run different types of analytics from dashboards and visualizations to big data processing, real-time analytics, and machine learning. They're essentially vast pools of raw data, the purpose of which is not yet defined.
Companies like Dbt Labs and Databricks are supporting a trend toward building open, unified data architectures like data lakes. This approach is characterized by democratizing access to data, making it available to a broader range of people within an organization. It suggests a future where AI is more deeply integrated into organizational strategies, facilitated by more powerful and easy-to-use data solutions.
‘Everybody Needs To Be Able To Invest in These Companies'
Most investors can't access this fast-evolving data and AI environment. Tech companies are increasingly staying private for longer, and often by the time they launch an initial public offering, much of the value opportunity has evaporated. With this in mind, Miller explained that his hope for the Innovation Fund is to give retail investors more access to early-stage support of companies driving the boom in data and AI.
"On a very personal level, Fundrise launched the Innovation Fund to democratize investing into these companies because they're not public," said Miller on the company's "Onward" podcast.
"OpenAI is not a public company. Databricks was not a public company. Canva is not a public company. I think that everybody needs to be able to invest in these companies."
Contact: Press Team
Phone: (202) 584-0550
SOURCE: Fundrise