Thoma Bravo Founder Warns of AI-Driven FOMO in Private Markets: A Cautionary Note

Thoma Bravo Founder Warns of AI-Driven FOMO in Private Markets Orlando Bravo, the founder of Thoma Bravo, a leading private equity firm, sounded a cautionary note at the Bloomberg New Voices event in Miami on Friday. Bravo expressed concerns that the rapid advancement of artificial intelligence technology has created a fear of missing out (FOMO) among investors, leading to hasty decisions that may ultimately prove costly. According to Bravo, the private market's enthusiasm for AI has reached a fever pitch, with many firms scrambling to invest in companies that they believe will be the next big thing. This frenzied activity has resulted in a surge in deal-making, with private equity firms and venture capitalists pouring billions of dollars into AI-related startups. In 2023, for instance, AI-focused startups raised a record $13.4 billion in private funding, up from $4.4 billion in 2020, according to a report by CB Insights. The market's obsession with AI is not hard to understand. The technology has the potential to revolutionize industries such as healthcare, finance, and transportation, and many investors believe that companies that can harness its power will reap enormous rewards. However, Bravo warned that the hype surrounding AI has created a situation in which investors are taking on excessive risk in pursuit of returns. Bravo's comments are a reminder that the private market's enthusiasm for AI is not without its challenges. While the technology has the potential to drive significant growth and innovation, it also raises important questions about the impact of automation on jobs and the potential for bias in AI decision-making systems. As the market continues to grapple with these issues, investors would do well to exercise caution and carefully consider the risks and rewards of investing in AI-related companies. Thoma Bravo, which has a track record of investing in successful technology companies, has itself been active in the AI space. The firm has invested in companies such as Talend, a data integration platform, and Coupa Software, a cloud-based procurement platform. However, Bravo's comments suggest that the firm is taking a measured approach to investing in AI, and is not getting caught up in the hype surrounding the technology. Looking ahead, the future of AI in the private market is likely to be shaped by a number of factors, including the pace of technological innovation, the emergence of new business models, and the regulatory environment. As the market continues to evolve, investors will need to be careful to separate hype from reality and to carefully consider the risks and rewards of investing in AI-related companies.