(INSEAD Knowledge) Venture capitalists’ role as funding source and mentor of tech start-ups makes them uniquely placed to press for more responsible use of technology.
When whistleblower Frances Haugen revealed last year that Facebook knew about the impact of its products on teenagers and the extent of misinformation on its platforms, it was only the latest, albeit devastating, warning of the harm technologies once hailed as transformative can inflict if not properly harnessed. Lawmakers and regulators from Europe, the Middle East and the United States are preparing to enact more regulations to hold Big Tech to account, but venture capital has a unique role to play in keeping artificial intelligence ethical – today and in the future.
For not only do VC investors provide funding for start-ups and fast-growing companies in the technology space, they also offer advice and guidance to the entrepreneurs and founders behind future unicorns, i.e. start-ups valued at over US$1 billion. Last year, start-ups raised a record US$621 billion from VCs and corporate venture vehicles, according to CB Insights. By the end of 2021, there were 959 unicorns around the world, compared to 569 in 2020.
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