Kevin Jackson - Founder @ AI Forge

Welcome to another Founder Wisdom podcast. We have Kevin Jackson with us today. Kev is a co-founder and chairman at a company called AI Forge. He's incubating AI startups and creating corporate growth with AI solutions, a multi-award winner. Um, he's an advisor at Lumina Strategy. And yeah, I think the thing I like the most about that headline is the answer is yes, what's the question? Uh, because there's too many like no people nowadays. So Kev, welcome to the podcast. Tell us a bit more about yourself and what you're up to.

Thanks, Charles. It's great to be here. Thanks for the invitation. Yeah, we are an AI incubator, 3 years in, 70, 70, I think 77 companies now through the program, 48 of which have now been funded and are on their sort of growth from pre-seed to seed. So, you know, we're pretty happy with that. We had the, the scrappy startup years of the first 2 years, and now we're into scale-up as we, uh, as we move forward.

And before you did AI Forge, uh, what were you doing? By the way, your speakers— I think I can hear myself. I think it switched, uh, when we started or something. Um, yeah, before AI Forge, what were you up to? Like, tell me about your long career.

Yeah, well, I spent a long time. Thank you. I changed it. I spent a long time in advertising and marketing with Grey Worldwide and with Saatchi Group and then with Jack Morton and George P. Johnson, building campaigns and experiences around the world, promoting brands and businesses, everyone from Adidas to Zumba and everyone in between. So, you know, a great, career working for corporate clients. And then, like everyone, I thought if I was half as clever as I thought I was, I should be doing it for myself. I wasn't half as clever as I thought I was. I was less than half as clever as I thought I was. And then went through the whole startup journey over the last sort of 6, 7 years.

Interesting. And I can see here, uh, London Muslim Shopping Festival, and also at some point of your career, uh, yeah, Indigenous, uh, yeah, yeah, stuff like it. Yeah, it seems like a pretty, uh, broad, uh, career there. So what, uh, what did you learn from doing these things?

Well, I, I've got that terrible thing— I run towards trouble rather than away from it. And the things that scare people are the things that excite me. So, um, with the Algebra Festivals, with the Muslim businesses, we built 3 events aimed exclusively at the Muslim community here in the UK. It's now, after 11 years, attracting half a million visitors a year to those events. Uh, the Indigenous— the Blueprints, helping the indigenous people of the world hold on to their assets, is still something close to my heart, and If I ever earn enough money to fund it. The idea was that there's 460 million indigenous people in the world and they're the poorest people on the planet, although they're asset rich. You know, they own the Amazon, they own gold mines, silver mines, copper mines, lithium mines. But usually it's been stolen, robbed, tricked out of them. So the idea was to bring Western funding and resources to Indigenous businesses. So there's an exchange of knowledge and the investment is evergreen. It rolls over into the next investment. So there's no flight capital. The problem with investing in Indigenous businesses, they do it once and then the money leaves the country. So the idea was to keep it in the country. It's still, as I said, it's still a project close to my heart and eventually I'll get back to it.

Right. And your first official startup, you said 6, 7 years ago, was that Host Help?

No, Host Help is still going. That's a facilitation business. So it was in fact Aljabeer Festivals, the Muslim businesses, that was, as I said, I was just an investor at the start of that and then helped them with structure and gave them access to things that they couldn't get access to on their own. But it's that whole startup to scale-up journey that really excited me. That's why I joined BlockDojo with my current partner Craig. And then after 2 years, we left there and started AI Forge, which is now 3 years old this month in April.

Right. And AI Forge, you said 100 companies. What do you do exactly for them? Do you cut checks? Because I see there's also startup credits. What's it about?

I think the cutting checks thing is a bit of a sort of fallacy. So what we do is we find pre-seed founders who in the main have an idea but not much more. Sometimes they don't even have a company. So through our recruitment process, we take them through a 12-week program that takes them from forming a company, understanding what the product is. We have a piece of IP called the stress test where we examine the business and put it under real pressure to, uh, to understand where the levers are. And then there's 110 activities— go-to-market, product market fit, marketing, you know, SEIS, tax, company formation, investor communication. And then in week 11, uh, which is our validation process, we put them in front of about 350, 380 pre-seed investors, and it's the market that validates their business by actually cutting checks for them and investing in their startups, right?

And in exchange of that program, they give you equity? Do they pay you? Like, what's the deal?

Yeah, no, they don't pay us. We have a 6% equity stake which keeps us involved long term. We're, we're almost— that we are in fact all their first business partner. So we're Currently, we're constantly available to them. Oh, you've gone. We're constantly available to them in terms of knowledge, experience. We surround them with a bunch of mentors. We have a whole process of, you know, we do about 40 events a year. So we're constantly putting them in front of things that can help them.

And most of the companies, are they London-based, mostly European?

At the moment, they're mostly London-based, but they don't have to be. But as we— the plan was always to take an AI Forge to cities around the world. We did 2 years ago, we did a global analysis of where money was being spent in AI, which took about 15 data points. It was university courses, it was government investment, government intent, investment in hardware, startup ecosystem, investment in startups, pre-seed investment particularly. We took those 15 data points and pulled them forward and got a ranking, and we're now starting to deliver against that ranking. So we're opening in Mumbai this year. We were going to go to Saudi Arabia next. We're probably going to go to Kuala Lumpur next, and then Austin, Texas, Calgary, and on and on.

And where can— what industry is, uh, the most competitive next to the US in Europe? Is it deep tech? Um, where do you see like the most intriguing startup stem from?

Yeah, I mean, we, to be honest, we don't do deep tech. We're applied AI, so something with an application for business, because we think that's the richest territory for our founders. But, you know, if you look at the amount of engineers that are coming out of India, I remember it was 30,000 a year or something. And then you look at the investment that the Indian government's making, you look at investment the Saudi Arabian government's making in— they've spent $300 billion in the Humana Fund, which is all about AI. And then you look at what the Kuala Lumpur, the Malaysian government are building in data centers. They're the data center now for most of the big tech brands that, you know, and, you know, there's a lot going on and it's not all in one stream. But what is in one stream is what businesses are doing with AI.

And you've been launching that one since, what, 3 years? How many startups have gone through the program?

Uh, 77.

77. Um, and when was the, the older one, like 2 years ago, or Yeah, 2 and a half years ago. And you're expecting an exit in what, 5, 10 years from now, your first one?

Uh, well, no, yeah, I mean, I think the dynamics of exits is, is changing as well to do with AI. I think there's two things going on. One, that there's, uh, you know, corporate acquisition, which I think is a real possibility, you know, of the 44, 45 companies that are still alive after the program, they're in 27 different industry verticals. And our view is that corporate clients are standing on that precipice of AI, not wanting to make a mistake. And I think when, if you acquire a company, a startup that's already doing the thing you want in your vertical, then it's a much easier route to innovation. I think there's acquihires where you're actually buying the company, but actually want the people inside it. Uh, and I think those sort of, those two corporate things are, are probably 4 years out. And I think the, the exits for us will probably be in 5 and 6. So I don't think we're going to survive a Series A. I think we'll get washed. I mean, we're only a 6% equity holder. So, you know, when you're rationalizing your cap table, we'll probably get washed out in the Series A or B.

And can you engineer that acquihire?

Yeah, I mean, we've got a very good outreach program to corporate clients. So our partnership director is responsible for understanding all the founders in the cohort and then going to corporates in their, in their vertical so that they can have a sneak peek and an early look at that. So it brings its Again, doesn't matter whether it's AI or internet or, you know, CRM, it's still about relationships. So it's about building those relationships so that corporates and investors can have a look at our founders.

Yeah. CVC and corporate acquisitions a bit harder though. Like these people tend to change role and if these things take like a year, they're super slow in pulling the trigger. What's your recipe to close with them?

Yeah. Again, as I was sort of alluding to, I think, you know, in the way that AI is speeding up the IPO process, there's not— you don't need as many rounds and there's not so many people involved and you can scale quicker, which gets you to a place where you could, you know, you don't need to go all through the pre-seed, seed, A, B, C, you know, they're going pre-seed, super seed, IPO. It's a much quicker process. And I think that's true of the way VCs are looking at it, and certainly the way CVCs are looking at it, because it's moving so quickly. And the thing is moving quickly enough that it can build momentum and credibility and a customer base. It doesn't need 4 or 5 years. It needs, you know, 2.

And is IPO still the goal in a market, a private market that is burgeoning?

Yeah, I mean, I think IPO is one of the— probably has more relevance for people like me, slightly older. I think there are many routes now for founders. I think IPO is quite a grueling trudge to success, but, you know, it's still the Holy Grail as far as people like me are concerned.

Interesting. And Yeah, the, the acquihire slash the exits. You've been acquired before, right? Tell me about your own exit.

Well, it depends what, what you're talking about. I think that, you know, it's very, it's very easy to do a sort of trade sale or a trade acquisition where, you know, I mean, it's a truism that most giant companies don't really do innovation that well. So if you can innovate in a particular sector, then the big, the big beasts in your sector will come and have a look at you. Because if you look at every, you know, every mission statement from all those giant corporations, all they're talking about is innovation and, you know, the world out there tomorrow once they've innovated. But it's very hard to do innovation in a company where you've got 300,000 employees. It's much easier to look outside and find people who, you know, subscribe to your values but are doing something completely different and radical.

What's the number one challenge your startup face normally? Is it fundraising, GTM?

Not drinking your own Kool-Aid. I think that, you know, the I think when you're a founder and you've worked on your business for whatever, let's say it's, you know, it's a minimum, you've been looking at this problem for 2 years, 3 years, you tend to cost in all that pain into your business. The fact that you haven't taken a salary for 2 years, the fact that you haven't gone on family holiday, the fact that you've been up all night, the fact that, you know, all of those things instead of a business valuation at $1, $1.5 million where it should be. They look at $5 million because they're trying to recover all that lost ground. That, you know, to get founders to look at their business realistically in the way— and I don't want to make this comparison too strongly, but in the way that, you know, when you take a family heirloom into the jeweler's and you say, this, we've had this in the family for 100 years, they offer you the value of the gold, which is like $50. You know, that's what founders are doing with the value of their companies, they're costing in all the pain and the suffering. You can't really do that because no one's interested in that. So one, you've got to be realistic about what you're building. You've got to be realistic about scaling your revenues as quickly as you possibly can, because that's the real, you know, if someone spends just $1 on the thing you're selling, you've now got a business.

Right.

Yeah.

Evaluating the market. How do you evaluate founder product market fit on your side?

So what I mean, we've got a whole series of masterclasses on product market fit, but one of the things we insist on, you know, we're cutting from the program. We start in, in our recruitment process, we start with about 400 founders at the top of the funnel. We interview, our AI does telephone interviews with all those 400, cuts that down to about 120. We interview personally the leadership team at AI Forge, interview all those people personally, and then we start on week 1, day 1 with about 70. We then set them a series of tasks. So by the time we get to day 1 of week 4, we're down to about 25 or 30, and then we're cutting all the time because we're, we're cutting for quality. And by the time we get to our investor week, we insist that our founders have at least 3 letters of intent from an industry, a company in their industry that says, you know, if you do this thing, we will look at it and we will give you a, you know, an opportunity to test because, you know, validation is, you know, name of the game in all of these things, both with the investors and with the big corporates in your industry sector.

Interesting. And founder product market fit, how do you make sure that they're the right founders for what they're building?

Or do you accept sometimes a guy with almost no background in what he's doing, but yet like, yeah, yeah, I like the founder product market fit because that's just come up, you know, in the last, what, a year and a half or so. You know, we've got 4 groups that come into our program. We've got recent graduates who are recent AI graduates who've got an idea and just want to bring it to the marketplace as quickly as they can. We've got academics who've been in AI for whatever, 8, 10 years and have got something and they just need to validate it or bring some commercialism to it so they can get it out there. Then there's entrepreneurs who've had 2 or 3 businesses who see an opportunity. So that's about 50, 60%. But the biggest group is founders who come out of the middle of a corporate client, have seen an opportunity to build something that is their job, that they know backwards, forwards, and inside out, and have an opportunity to develop it and then take it back to their previous employer. That's the biggest group in our, in our program, people who have worked with, you know, banks, consulting companies, tech firms, it doesn't matter what, they've seen where AI could take the thing they do and, you know, and with us they develop it.

I think, yeah, students and ex-corporates are my least favorite founder persona. Students because they have like zero clue most of the time. I've been there, right? I've launched a startup right out of the gate and I was arrogant. I thought I could conquer the world. My first nootropic failed in like 3 years or so, was still like a triple PhD in entrepreneurship. And, uh, so I can take some students, right, like some exceptions. Let's say they've been chess prodigies and, uh, you know, like super competitive tiger parents, for example. But, uh, ex-corporate, I have a very hard time because the, the entrepreneurialism in them usually is very low. What do you have to say about that?

Yeah, so I have to say I 100% agree with you, but I would also extend that into all startup founders are deluded. They have to be because creating a startup, to look at something that everyone else has looked at 100 times, 1,000 times, and to think something different is you're delusional. And to think you can grow a business that can get funded and can be successful is delusional. So it doesn't matter where you're from, whether you're a student, an academic, a corporate, or a, you know, an entrepreneur, you've got to be slightly deluded. So, you know, with that as the playing field, yeah, of course, some students can be arrogant, but, and some corporates can be entrepreneurial. I think what we do through our selection process, you know, as I say, we start with 400. And by the time we finished on graduation or Investor Day, we're down to 15, maximum 17. So it's a very tight process and we're solving for that delusion or that misalignment all the way through the 12 weeks. So, you know, I think you can always find, we can always find successful founders. It sort of doesn't matter where they come from. It matters them, you know, it's about, as you know, Charles, it's about resilience. You're going to get hit by a tsunami a week, a tsunami a day, a tsunami of problems. And it's about your resilience, how you bounce back, how you keep going, and how you make this thing work that you've committed to, that you've committed to your investors, to your friends, to your family. You have to have that resilience. And that's really where our judgment is.

Yeah, 100% with the delusion part. Um, just that with AI and all that information, I feel that you have to be more of an opportunist nowadays because the information is there, just that most people are too lazy to research it and to engage into a brain-sparring battle with an AI and really validate your thesis. But once you have it and you've tested it to the market, now you have certainty. You just know that it's just a matter of time until the gates unlock, right? And might take 3 fucking years until they unlock. So you need to be very patient and very gritty, right? Um, your application process, I want to double-click on it. What are the questions in there? Because sometimes you can ask too many questions and you can alienate some founders and they can bounce. How do you get all these founders to apply, right? Tell me a bit more about that, uh, that funnel of yours.

Yeah, I mean, I think the— we've tried, and don't get me wrong, you know, obviously we're a startup, so we've made as many mistakes as everyone. When we started, the process was a lot more difficult to apply. We've made it as simple as we can in terms of applications. And as I said, what happens is we— our AI called Annalise interviews every single founder. And over the last 3 years, we've built Annalise into being a really effective partner for us, an AI agent partner. And, you know, we've sort of blind tested her against our own interviews and they've been spot on. So we've got no worries about that. But as I said, you know, I think that We've made the application process as easy as we can in terms of the application form. So what we want to do is get you talking as soon as we can, and we want to get you through Annalise with your pitch deck so that you can talk to us. What happens then? We interview the whatever's left, the 120 that are left. We then, we then When they start, we're down to about 70. What we do in week 1, weeks 1, 2, and 3, we give them some tasks and then we put them in front of our furnace, which is our judging panel, the great and the good of AI, everyone from Amazon, Deloitte, HSBC, and they then mark us down to the final sort of 25, 30. So there's a lot of eyes work looking at the founders. And although most people can bluff their way through an hour's interview, 3 weeks under the microscope and a couple of interviews either side and some deep questioning from our furnace judging panel, I think we are pretty good then. Not the best founders, because I think that would be mistaken. The founders who are going to fit best with our program, you know, because it's a very hands-on program. We're in their lives. It's very emotional. It's very challenging. We push our founders. Because we know that when you get out the program at the other end, it's not easy. So we don't want to give them any sort of false security that once they get through this, the world's going to be an easy place because it's not.

And how do you get all these folks to apply? Is it ads, your main funnels? It's referrals?

Like, yeah, referrals and LinkedIn and, you know, there's some Facebook going on. So We really— and we go to lots of events, we go to lots of founder events and we speak at lots of things. So there's always a constant pipeline of founders and obviously the majority of them aren't right for the program, but we try and give them some positive feedback and then we collect our founders that don't get into the program into a thing called the Firepit, which is our online community where we're trying to help them understand where they could improve or where they could connect, or, you know, and the community is quite active in terms of helping each other.

And do you organize also your own events or online events?

Yeah, we have, as I said, we have about 40 events a year, which is both recruitment events, mentor events, and our own sort of investor events. So It's quite an active program because, you know, it's important that our founders understand that pitching to investors is sort of the reason they're there. You know, it's not, you know, this course isn't to show for them to demonstrate how clever they are. It's for them to get funded so that they can develop their program. So we don't make it hard from that perspective because they've got to build what they want to build. But in terms of getting in front of founders and building their pitch deck and their investor deck, you know, we're very definitive about how they do that.

Kevin, thanks so much for being on today. Where can people find out more about you?

So obviously, I'm— ai-forge.org. You can go to our website. Or any— I'm on LinkedIn. I'm very active on LinkedIn. You'll see the only bald Kevin Jackson on LinkedIn. That's me.

That was Kevin and Charles Cormier for another