1Mby1M Virtual Accelerator AI Investor Forum: Ray Wu, Alumni Ventures AI Fund (Part 2)

Sramana Mitra: If you were to highlight some themes that you’re seeing in the deal flow right now, what are some of the trends that you’re seeing?

Ray Wu: Like I mentioned, infrastructure has always been one of the core themes, only because at this time, I think a lot is around infrastructure, just like we saw in the dotcom days, the internet wave, and the mobile wave.

During the Internet wave, I was in Cisco. It was mainly the infrastructure build-out first before we saw companies like Facebook and Google come in and build on top of that. Mobile was the same—once mobile happened, we saw companies like Uber and Airbnb build on top of it.

That kind of infrastructure wave is the first wave. We call it AI-first infrastructure. So those areas are one.

Then we started seeing more of what we call AI-first verticals—industries undergoing transformation. AI is empowering a lot of new areas in new ways. Sometimes you see AI-powered rollups—new industries being taken over by AI.

Sramana Mitra: Are you invested in AI-powered rollups?

Ray Wu: We are. We’ve done a few deals, and this is one area we spend a lot of time on. We normally talk about high-touch, high-power, because it is high touch.

Sramana Mitra: Let me explain for the audience what AI-powered rollups are. The thesis is that traditional companies can gain huge leverage by infusing AI into all dimensions of an existing company. You take a company with a strong customer base, turn it into an AI-first company by integrating AI throughout, while it continues to run its core business. This investment thesis is floating around in Silicon Valley; we’ve never seen deals like this before.

Have you invested in one? I’d love to hear a specific example.

Ray Wu: Sure. This is definitely a new theme. Traditionally, this was only in the PE realm. PE is usually about human cost cutting. AI, acting as a semi-human agent, offers not just augmentation but also some replacement.

We do see these high-touch, high-tech models working. One company we’ve invested in is called Roofer. It’s a roof aggregation company doing vertical rollups of roofing service providers. Roofing is one of the most expensive human cost areas in home improvement. They’re building a national brand. People come in through that brand as a lead, and they use technology like drones to take roof photos and provide quotes quickly. They may use their own service teams or partner with local providers. Over time, they aim to build national coverage. That’s one area in home improvement.

Sramana Mitra: So, is it like an Angie’s List kind of model? It’s a vertical specific, Angie’s list kind of model, right?

You have roofers that are going to be part of this brand, and the umbrella brand is going to collect the leads and then distribute it

to the service providers, isn’t that what you just said?

Ray Wu: It may seem like it, but it’s actually different. It’s a vertical-specific rollup. They acquire roofing firms in local areas. You can’t have your own service teams in every geography upfront, so it’s a regional rollup.

They started in Texas and have acquired firms there. They’re looking at other regions now. From a customer’s perspective, leads can come from anywhere in the country. They can then serve customers using local partners.

The tech enables quick quoting and optimized construction planning around materials and services. This combines tech with a traditional service model.

Sramana Mitra: One of the big tech value additions is drones doing the assessment?

Ray Wu: Yes, and also, over time, they accumulate a lot of data—roof conditions, replacement costs—so you get a large dataset. With AI, you can quickly figure out cost, complexity, time, service, and insurance needs. There are many new angles this enables in the service space.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator AI Investor Forum: Ray Wu, Alumni Ventures AI Fund
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