Part 4/7:
When examining the performance metrics of AI startups, Green explained his firm's evaluation criteria, focusing particularly on Gross Dollar Retention (GDR). This metric assesses how much revenue a company retains from its existing customer base year-over-year before considering upsells. Green noted that many AI startups exhibit poor GDR, churning through customers rapidly, which raises red flags for potential investors.
Despite this, he highlighted that virtually every company in their portfolio is experimenting with AI to enhance efficiency and drive revenue. Green noted the growing trend of firms creating products with embedded AI capabilities, suggesting that even if AI is merely used for cost-saving measures, there’s ongoing exploration for profitable avenues.