Alese Stroud
Issac.ai of Little Rock aims to jump-start due diligence for angel investors by using artificial intelligence technology to provide them with a way to compare investment opportunities and to make the most of the time they spend on due diligence, says founder and CEO Alese Stroud.
An angel investor is someone who provides capital for a startup, usually in exchange for convertible debt or ownership equity.
With Issac.ai, a candidate company — the startup seeking investment — answers questions online that Issac.ai then uses to generate a report for angel investors to include in their due diligence documents.
The startup also receives the report, which could help them improve their chances of receiving investment in the future, Stroud said.
“Generally speaking, my observation has been, while there’s a common element of inquiry that’s done, it’s not done in a way that allows for comparison. … People tend to use checklists that they find out on the internet,” she said. “And those are useful, but I don’t see them as being anywhere close to being as useful as Isaac.ai, because we will allow you to to start with this same base of 180 topics that we look at and get the answers to those and then that informs the questions that you ask.”
Stroud is also chairman of the board of the Ark Angel Alliance, the state’s only angel investment network, and is attending the national Angel Capital Association’s Angel University to better serve on the board and to better lead her company.
Right now, Issac.ai offers a pre-AI, software-as-a-service version of its product for $100 per module. There are eight assessment modules covering the business leadership, sales, marketing, legal, finance, human resources, operations and technology aspects of the candidate companies.
Stroud said Issac.ai — which is self-funded, has two employees including her and hopes to be profitable in three years — is looking to roll out its next-stage product in the third quarter or fourth quarter of this year. It will charge a subscription fee to angel investor clients, and candidate companies may also be asked to pay a nominal fee for their reports.
Issac.ai is already recruiting experienced angel investors to “train” the artificial intelligence, Stroud said. The idea is that less experienced angel investors, clients of Issac.ai, will benefit from the expertise of their more experienced counterparts.
As for the next-stage product: “What this looks like is the candidate company will answer the usual scope of questions. And they’ll get the report, but the AI will then say whether or not … this is a highly investable company,” she said. “Envision a stoplight. Some companies will be green, like write them a check today. Some of them will be yellow, which is look a little deeper. And some of them will be red, which means don’t write them a check today — they have some work to do — unless you just like super-risky companies.”
Issac.ai is also conducting an “advanced customer discovery process” that involves asking angel investors nationwide how an AI product like the one it is working on would be helpful to them, what they’d like to pay for it and what design elements are critical to them.
Work on the next-stage AI product began about a year and a half ago. Since then, Issac.ai has hired Snap Surveys of London and Bristol in Britain and Portsmouth, New Hampshire.
Snap Surveys has “built a survey platform that we could just bolt our work on top of,” Stroud said. “So we didn’t have to build the whole platform. We just put content on it, and you know that’s a whole lot. It’s much better to write a check for $1,500 to a company that’s got a platform that will work at this stage of the company, instead of spending a half-million on having the platform that’s perfect for your concept.”
In addition, Issac.ai adapted the toolkit developed for another company Stroud founded in order to launch the product it currently sells.
Issac.ai spun off from that company, Merger Match, in 2019.
The goal of Merger Match was to provide better due diligence to the merger and acquisition market, but that market proved difficult to gain traction in, Stroud said. So the company pivoted to serving the angel investor market instead through Issac.ai.
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