T’is the era to bet on the Chef...

Next Alpha is from leaders who can maneuver the elements into robust business models...

Author

David Tswamuno
February 14, 2025

A happy Valentine’s day to you all❤ Love is such a beautiful thing…

Anyway…Since the Deepseek kerfuffle, I have fielded many questions from investors and friends on AI. I wanted to share my broader perspective on technology investing. Generative AI is the latest in a series of technological waves that started around 2008 with the Mobile & Cloud revolution. We have since had Deep Learning, Blockchain, Web3, Biotech, Energy Tech etc. The AI wave is unlocking previously unimaginable efficiencies across industries and business functions while driving us towards Artificial General Intelligence, where technology functions like humans and generalizes many of the technical competencies previously considered critical to entrepreneurial success.

The philosophy
Technological development is strengthening the foundational capabilities that accelerate human progress at an unmatched rate. Unfortunately, it’s also excercebating the Matthew Effect: positioning those with initial advantages—whether in wealth, knowledge, fame, or resources—to compound their advantages at an even faster pace, and resulting in greater societal disparity.

The widening gap between technological and social progress is the most important problem and opportunity of our lifetime.

Mission-driven founders have a generational opportunity to deploy (all of) technology to create markets that establish viable baselines (>1) from which billions of people worldwide can begin to participate in the compounding benefits of technological advancement. At Fairbridge we call this the work of Bridging Progress GapsSM. The preservation of our way of life depends on our ability to deliver progress to all.

Fairbridge invests in technology applications
We divide technology into two categories: Infrastructure and Applications.

As technology infrastructure commoditizes, longer term value shifts towards applications. At Fairbridge we focus on the application layer. It serves our fund’s mission and business model best.

On infrastructure: Only a few large players with deep pockets, patient capital, and relevant raw material can truly benefit from investment in infrastructure. The ability to collect tolls is also critical. That’s why tech incumbents and large corporations are the leading investors in AI infrastructure.

The infrastructure cost curve: News that Deepseek cost 6% of the total investment in OpenAI is the latest evidence for how quickly infrastructure development costs fall. We have seen this many times with the cost of solar modules, organic food, lithium batteries etc.

Infrastructure as applications? There are cases where specialized infrastructure doubles as applications in highly valuable niches. Companies that come to mind are Virgo and DentalXr. We invested in TherapyIQ, a provider of infrastructure for fast setup of therapy practices to broaden patient access. We also invested in PaveFi, the analytics infrastructure for credit firms to democratize lending.

Our favorite applications: Success of technology applications depends on timing i.e. the readiness of the infrastructure’s capabilities, of the market to embrace a solution, and a company’s ability to combine the two into a sustainably profitable business.

At Fairbridge, we are excited by areas where technology applications will deliver new efficiencies and drive superior customer value at scale, driven by data and processes. The areas are insurance, health, tax, law, and banking.

In an era of peak technology, leadership is the strongest predictor of success

Betting on the best Chefs: We invest copious amounts of time with Generational Founders who deeply understand how technology can be applied to create new markets that solve real problems. They bring unique insight into their problem, often driven by lived experience and domain expertise. And, they are adept at turning key ingredients into consistently excellent customer experiences and scale them into enduring businesses.

Why focus so much on founders? Today, the capability and trust in institutions in all areas of public good is at an all-time low. Accountability mechanisms—Chinese walls, regulation, enforcement, ethics, incentives—are compromised.

In a world of low organizational trust, success accrues to individuals who declare what they stand for, embody it, and embrace responsibility. We are betting on these exceptional leaders to transform the ingredients—people, story, capital, technology—into enduring businesses that deliver inclusive societal progress.

A call for leaders to step up

Technological development is rapidly reinforcing the quality and efficiency of rails for advancing human development. It’s driving the fundamental reimagination of business models, ushering a generational opportunity to build companies of great significance: Companies that unlock a viable baseline for billions worldwide to access the compounding benefits of technological progress. We are calling all Generational Founders to step up to the plate. Reach out 💚