SapientX develops sophisticated artificial intelligence software for voice recognition. And the company has also launched a crowdfunding financing on the Wefunder site. In other words, anyone can invest in SapientX (the minimum is $100).
Even though mega-cap tech companies have invested substantial amounts in voice technology — such as with Apple’s (NASDAQ:AAPL) Siri and Amazon’s (NASDAQ:AMZN) Alexa — there is still much to be done. The fact is that accuracy continues to be a challenge and there are also concerns about user privacy.
But for SapientX, this is a big opportunity. Keep in mind that the co-founders have deep experience with AI. For example, Bruce Wilcox has more than four decades in the field and has won the Loebner Prize four times for the best conversational AI. He has also worked at companies like Amazon and Fujitsu (OTCMKTS:FJTSY).
Then there is Maclen Marvit. He is actually a rocket scientist, having worked at NASA and Blue Origin.
And CEO David Colleen has led development teams for AI and virtual reality (VR). During his career, he has worked with 17 Fortune 100 companies on software projects.
How It Works
The good news about Siri and Alexa is that they have introduced millions of people to voice interfaces. The result is that this category has seen substantial growth — which should continue for some time. After all, there are companies in many industries that want to use voice systems for their own offerings.
Yet when it comes to the SapientX platform, there is a often pushback from potential customers. How is it possible that a small company can compete against giants like Apple and Amazon?
Is the technology even real?
These concerns are certainly reasonable — and they go to the heart of whether it makes sense to invest in SapientX. But the Wefunder profile does point out that the company’s technology is operational and has trial customers like Mitsubishi (OTCMKTS:MSBHY), Volvo, KTM, Yamaha (OTCMKTS:YAHMF) and General Electric (NYSE:GE). The goal is to commercialize the AI system by the end of this year.
The key to SapientX is that it has built its conversation platform from the ground up. This has allowed the company to focus on the main areas that customers want. To this end, there has been the addition of 40 languages and the system does not need to use the internet to operate (it can use local data). The company also notes that its conversational understanding accuracy is up to 99%. By comparison, Siri is at 75% and Alexa is at 73%.
Should You Invest in SapientX?
Consider that an earlier version of SapientX was embedded in Outfit7’s virtual pet, called Talking Angela. The company would ultimately exit at $1 billion. In fact, the AI voice space has seen a myriad of high return outcomes for startup investments. In a group of 23 companies, 16 exited in the last four years and the average return was 17x, according to analysis from SapientX.
OK then, as for the crowdfunding round from the company, the valuation is at $7 million. Investors will receive preferred stock in the company, which means that they get greater claims to the assets if there is a liquidation event, such as a bankruptcy or acquisition.
But despite the traction with SapientX, there still remain substantial risks. Note that the revenues are minimal and the net loss was $399,329 in the latest fiscal year. Another issue has been the impact of the novel coronavirus, which has delayed some of the customer contracts and has made some prospects more hesitant.
So when evaluating SapientX, it’s a good idea to do your own analysis and see if this investment fits within your diversification needs.
Tom Taulli (@ttaulli) is an advisor and author of various books and online courses about technology, including Artificial Intelligence Basics, The Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s. As of this writing, he did not hold a position in any of the aforementioned securities.
Investing through equity and real estate crowdfunding or asset tokenization requires a high degree of risk tolerance. Despite what individual companies may promise, there’s always the chance of losing a portion, or the entirety, of your investment. These risks include:
1) Greater chance of failure
2) Risk of fraudulent activity
3) Lack of liquidity
4) Economic downturns
5) Dearth of investor education
Read more: Private Investing Risks