AI ethics practices VCs can adopt

The decisions that investors make are crucial for the future of AI, but there aren't many resources to support them. Therefore, I've compiled a list of AI ethics practices VCs can adopt.

This list is based on workshops and conversations I conducted with VCs, startups, AI ethicists, and academics, including talks at:

Principles for Responsible Investment (PRI), The Center for the Philosophy of Science at Pittsburgh University, The Data Ethics Speaker Series at Oregon University, and the "Trust in Information“ group at the High-Performance Computing Center (HLRS) at Stuttgart university.

➤ Due Diligence

When considering whether to invest in a startup, VCs can ask the startups questions about their AI ethics approach. In fact, the most common VC AI ethics practice I encountered is asking startups about AI ethics in due diligence and screening.

What should the VCs ask? I am currently working on a list of questions with VentureESG.

➤ Documentation

VCs can explicitly include AI ethics in the documents they use to informs their decision making, such as investment memos and score cards.

➤ Valuation

The quality and adoption of AI systems improves when they are developed with AI ethics in mind. In addition, AI ethics reduces compliance and reputational risks. Therefore, it makes sense to incorporate AI ethics in the process of deciding how profitable the startup is.

➤ Term sheets

A term sheet is an agreement between the VC and the startup about the terms of the investment. VCs can use the term sheet to define how AI ethics will be present in the engagement with the startup.

➤ Board involvement

VCs often take seats in the boards of their portfolio companies. VCs in that position can make sure that AI ethics metrics and reporting are on the board's agenda and that hiring in the startup takes AI ethics into account.

➤ Advice and resources

VCs can also provide the portfolio companies with educational resources, such as workshops, and introduce them to AI ethics experts.

➤ Fund development

VCs can include AI ethics when developing their fund. For example, they can discuss AI ethics in their fund thesis and when hiring staff.

➤ Related and helpful resources are

PRI's "Starting Up: Responsible investing in Venture Capital"

Belrfer Center's "Responsible Investing in Tech and Venture Capital"

➤ Read the LinkedIn discussion here

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