Artificial intelligence is no longer just a tech buzzword. It’s sneaking into almost every corner of the business world, from automating customer service to predicting which brand of cereal you’ll crave at 2am. But as AI keeps muscling into the mainstream, a lot of founders are fumbling the one thing that really matters when it comes to raising capital: positioning AI effectively in their fundraising pitch.

We've seen plenty of Investment Memorandums (IMs) recently which do not demonstrate a clear AI story. Either the tech is overhyped to the point of sounding like sci-fi or it’s mentioned so casually that it seems thrown in for show. What investors want to see is how AI is moving the needle.

A company’s AI strategy should come off as a smart, practical game plan that makes investors sit up and think, ‘Yes, that makes sense, and it is adding value to my investment.’

So, here is a basic checklist to best communicate your AI story:

1. AI Strategy and Roadmap: Show how AI is actively making your product or service smarter, faster, or more profitable. Give real examples which demonstrate how AI is driving value today and how it’s going to scale tomorrow.

2. Data Moat: Your data is key, not an afterthought. Investors want to know what your data is worth. Explain how you are gathering it, why it’s unique, and how it powers your AI algorithms. A solid data moat can make your business defensible, but vague claims will only serve as red flags to investors.

3. AI Implementation and Use Cases: Detail the tech leveraging your data, whether it’s GPT-4 running your chatbot or computer vision optimising your warehouse. Investors love new technology, but they want to see working, revenue-generating tools more.

4. Competitive Advantage: Demonstrate how your approach creates a barrier to entry, saves money, or makes customers choose your product. Show how AI sets you apart from your competition.

5. Risk and Mitigation: Be upfront about the risks, such as data bias, regulatory headaches, or underperforming technology. Investors will appreciate your honesty and strategies to manage the inevitable bumps in the road.

6. Financial Impact: Don’t include AI for the sake of AI. Investors want to see how this tech is pushing revenue or cutting costs. Quantify the impact with thought-through projections based on actual results.

7. Talent and Expertise: An AI strategy is only as good as the people behind it. Make sure you highlight your team’s expertise and any partnerships that matter. Investors back people, not ideas.

At Aalto Capital, we are all about helping founders craft a convincing narrative. Get in touch if you want to shape an AI story that resonates with investors.