Navigating the AI Hype Cycle: Investment, Ecosystems, and the Quest for Utility
The Thematic Roundtable at the VNTR Investor Forum in Dubai, operating under the Chatham House Rule, offered a professional and analytical deep dive into the state of Artificial Intelligence (AI) from the perspective of venture capital, founders, and industry experts. The central theme was a collective effort to gauge where AI currently sits on the hype cycle and, critically, identify the investable, practical use cases that move beyond the gimmicky to deliver genuine utility. The general sentiment was one of measured excitement, acknowledging the transformative potential of the technology while remaining acutely focused on the challenges of market fragmentation, regulation, and the need for a shift from technological novelty to true business application.
From Novelty to Necessity: Defining AI Utility
The discussion quickly moved to distinguishing between "AI-native" companies—those built from the ground up with AI as their core value proposition—and "AI implementers" who incorporate the technology into existing models. A participant noted that many current solutions, particularly in the early adoption phase, appear "almost identical" and that the sheer volume of products copying one another makes filtering for true value a challenge for investors. This phenomenon echoes the early days of the dot-com and mobile app booms, where a flood of similar ideas eventually gave way to market consolidation.
The group agreed that the real value proposition of AI is not in simply automating existing, often archaic, processes—which one individual described as merely automating the exact same flawed system—but in redesigning workflows and business models around the technology. AI, therefore, is an enabler, not a silver bullet. Its success hinges on users and leaders being able to clearly articulate a problem before applying the solution. One participant pointed out that within many major companies, the adoption of AI is not yet the prevailing conversation among C-suite leaders, suggesting that the industry hype has not fully translated into widespread enterprise action.
The Sovereign Scale and Regulatory Trade-Offs
A key focus was the regional dynamics shaping AI investment and development. Specifically, the conversation addressed the concept of AI sovereignty and the tension between operating in open, fast-moving markets like the UAE and the vast capital and market scale of established tech hubs like Silicon Valley and Beijing.
The Middle East's approach—particularly for sensitive sectors like financial services and security—is driving a demand for localised infrastructure, with the expectation that full-stack solutions, from hosting to application, should be locally controlled or compliant. This focus on sovereignty creates an inherent trade-off. While it creates a strong, defensible 'moat' against competition and provides a first-mover advantage in a less-regulated environment , it also risks limiting the ultimate growth potential of a startup by restricting its immediate target market size compared to one with unified regulation across a much larger population.
Conversely, the more open, pro-innovation approach and can-do spirit of markets like Dubai were contrasted with the slower, more bureaucratic and often restrictive regulatory environments of some European countries, where vested interests can stifle innovation. The consensus was that markets like the UAE offer a launchpad for a proof-of-concept that can later be replicated and adapted for more regulated international markets, though this requires more investment and time to deal with heterogeneous regulations across multiple jurisdictions.
The Future of Investment and Agentic AI
The conversation naturally extended to how AI is currently impacting the investment process. While participants generally use AI to crunch data, generate scenarios, and perform "legwork" faster—acting as a sophisticated calculator—there was a clear lack of trust in using it as the sole basis for investment decisions. The concept of Agentic AI—where a private, personalised AI agent implicitly understands an individual’s criteria to make or assist in decisions—was identified as the "next hype curve." This shift implies a future where agents interact with each other to complete tasks (like scheduling), fundamentally changing the nature of human-in-the-loop decision-making.
A powerful anecdote about a child's interaction with a sophisticated, personalised AI for a school assignment underscored the coming "two-class society" of future generations: those who are empowered to use AI to dramatically advance their work and knowledge, and those who are left behind.
Conclusion and General Sentiment
The general sentiment of the roundtable was professionally optimistic. The participants believe AI is far more than a passing gimmick like the NFT bubble; it is a foundational technology that is getting smarter and will not go away. The challenge for investors and founders is to move beyond the early-stage hype and focus on usefulness—finding ways to ride the technology to business success.
The prevailing mood was a commitment to focused, practical investment in applications, especially those that can scale globally while navigating regional regulatory complexities. The ambition in the Middle East to build a global tech ecosystem was seen as an attractive, central hub for international talent to develop and test ideas before seeking scale in larger, more regulated markets. The future of AI, according to the group, is less about raw technological power and more about disciplined application, clear logic, and strategic regulatory compliance.
