Unlocking long-term value in AI

At Kadan Capital, we’re excited about the transformative potential of application layer AI in solving pressing challenges locally and globally. In collaboration with Jachin Cheng, we have developed a comprehensive AI investment thesis for Kadan Capital in early 2024 and have picked a few elements to share here. When investing in application layer AI startups, we pay particular attention to three key pillars that we call the “3Ds”: Data, Distribution, and Demographics.

1. Data: Moat and Monetisable Asset

• Startups with a robust strategy for acquiring, utilising, and monetizing data to address real-world challenges are well-positioned for success.

• Proprietary or hard-to-acquire datasets (e.g., text, image and video data) can lead to a competitive edge.

• Regional players can differentiate themselves from global competitors with specialised datasets (e.g., via local language, consumer behaviour).

2. Distribution: Scaling With Strong Partnerships

• B2B AI startups often experience an initial lack of visibility and credibility.

• Collaborations with complementary independent software vendors (ISVs), system integrators (SIs) or professional services firms can significantly accelerate the GTM.

• Sales through strong partners can reduce operational costs, extend reach and help access new key customers early.

3. Demographics: Local Expertise as a Competitive Edge

• Local founders often show a deeper understanding of their home market’s nuances, challenges and opportunities.

• The unique macro, regulation and culture of each Asian market brings opportunities for AI startups (e.g., major productivity gap and age-based labour shortages in mature markets).

• Existing networks and relationships within the region can help accelerate go-to-market efforts and secure partnerships with key stakeholders.

We’re committed to supporting visionary founders in Asia and beyond who harness these 3D’s to build disruptive AI companies. If this resonates with you as a startup founder, we’d love to hear your story. Pitch to us here! You can also leave your comments on our LinkedIn post.