Private-Market “FOMO” on AI Could Trigger Costly Mistakes — Says Top Deal-Maker
Investors pouring money into private AI startups may be setting themselves up for painful losses, warns veteran negotiator Orlando Bravo. In a recent interview, Bravo cautioned that the current wave of enthusiasm for artificial-intelligence ventures is driven more by fear of missing out (FOMO) than by sober assessments of value — a dynamic that historically precedes missteps. (Bloomberg)
⚠️ The Risky Side of Private-Market AI Fever
As the AI boom grabs headlines and capital alike, private equity and venture-capital firms are scrambling to back the next big winner. According to Bravo, this rush is fueling “enormous” anxiety as decision-makers struggle to accurately judge which companies have real potential — and which are riding a speculative wave. (Bloomberg)
Because private markets lack the same transparent metrics and market pressure that govern public companies, exuberance can go unchecked. That makes it easy for valuations to drift far from underlying fundamentals — a misalignment Bravo fears could lead to expensive mistakes when reality bites. (Bloomberg)
Why Transparency and Discipline Matter — and Disappear under FOMO
Unlike public markets, where share prices adjust daily under the glare of scrutiny, private-market deals often rely on projections and optimism. When investors rush in based on hype rather than hard data, it becomes difficult to differentiate between genuine innovation and overblown promise.
Bravo’s warning highlights an enduring truth about investing: without discipline, strong deal processes or rigorous due diligence, even seasoned professionals can be blindsided by collective exuberance. The more capital floods in, the higher the stakes — and the harder it becomes to change course if the outlook gets shaky.
The Broader Implications for the AI Boom
If Bravo’s cautions hold true, a wave of write-downs or failed ventures could ripple through the private-equity ecosystem. That may erode investor confidence, tighten funding, and slow down the growth of AI startups — especially those relying on fresh capital rounds rather than proven business models.
In a broader sense, this could force a reckoning: the AI boom (see glossary) might shift from a narrative of boundless potential to a more sober phase rooted in fundamentals and sustainability.
Glossary
- FOMO: “Fear of Missing Out.” In investing, it refers to the tendency of investors to jump on trends or hype without rigorous evaluation, often leading to overvaluation or poor decision-making.
- Private markets: Investment markets involving non–publicly traded companies (e.g., in private equity or venture capital). These lack daily price discovery and often rely on periodic valuations rather than real-time trading.
- Valuation misalignment: A situation where a company’s perceived value — often driven by optimism or hype — significantly exceeds its underlying business fundamentals (revenue, profitability, growth prospects).
As the AI frenzy continues, Bravo’s warning serves as a timely reminder that even the most glittering hype needs to stand up to hard scrutiny. For now, investors in private AI ventures — and the broader AI industry — would do well to remember that not all that glitters is gold.
