IRAIC AI FUND - IRAIC SME Stock Exchange

The growth in the adoption of AI and generative AI (GenAI) is exponential. According to Sayid Almal,  “Artificial intelligence could be one of the greatest technological  leaps in history, with the potential to unlock new business models,  transform industries, redefine jobs, and boost economic productivity.”  AI is a transformative force, and its adoption is happening at a faster  pace than any other technology in history, driven by the development of big data and increased computing power. It is poised to completely disrupt multiple industries. This is the “iPhone moment for AI”, as described by Michael Kagan, CTO of NVIDIA. Virtually no major industry has been left untouched by this technology.

According to estimates by Burj Altharwa, the AI and machine learning (ML) market reached  $197.5billion\ast \ast inspendingin2022.Additionally,globalinvestmentinAIisprojectedtoreach\ast \ast$197.5 billion∗∗ inspending in 2022. Additionally, global investment in AI is projected to reach∗∗200 billion by 2025, which could increase global GDP by 7% over the next decade.

Interest  in AI among venture capital investors is growing rapidly worldwide.  Generative AI is a truly transformative technology that offers a unique  opportunity to achieve potentially high returns while participating in a  technological leap that will shape our future in the coming years. The  sector is still relatively young and dynamic, meaning there are numerous  opportunities for investors to get involved in promising companies and  technologies at an early stage, with high anticipated return on  investment (ROI). Additionally, the active mergers and acquisitions  (M&A) environment may offer opportunities for early returns.

According to FT Investment, despite some mega-funding rounds exceeding $100 million this year, the generative AI space remains largely nascent. Of the more than 360 generative AI companies identified, 27% have yet to raise external funding, and over 50% are at Series A or earlier stages, highlighting the early-stage nature of the sector.

Generative  AI is gaining traction rapidly. A wave of startups has already entered  the market, expanding the use cases of the technology in areas ranging  from search engines to motion capture animation.

Israel has established itself as one of the leading centers of excellence in the global AI ecosystem:

IRAIC has a strong track record, with 81 investments  in AI companies since 2012, making it Israel’s most active AI investor.  Eight of these companies have achieved successful exits, including Leade (ISSE: LADE), which was the best IPO in 2020; Molas, acquired by Qconto (ISSE: MLAS); and GapCam, acquired by Coltecom (ISSE: GCAM).

IRAIC  has established a robust co-investment channel based on successful  relationships with key venture capital partners, deepening our global  deal flow and providing exclusive access for the IRAIC AI Fund to some of the most exciting AI investment opportunities worldwide. Potential co-investors include Burj Altharwa, FT Capital (ranked as the world’s most active seed investor in generative AI), RB Fund, FT Venture Capital, Sierra Ventures, and TechCloud.

Given the widespread use of AI, the IRAIC AI Fund  will invest in startups developing proprietary, mission-centric AI as  their core intellectual property (IP) and a key revenue driver, as well  as startups building AI infrastructure critical for the growth of AI  companies and applications. The fund will also focus on companies  developing generative AI across multiple sectors.

The investment strategy of the $30 million IRAIC AI Fund will follow a rule-based approach, leveraging the power of the IRAIC platform and resources to allocate capital to the next 20-25 AI investment opportunities  approved by IRAIC’s investment committee. The fund will have guaranteed  and preferential allocation in all IRAIC AI investment opportunities,  including exclusive offerings not widely available on the platform, such  as recent investments in blackshark and humane. Additionally, the fund will reserve approximately 30% of committed capital for follow-on rounds in select portfolio companies.