Emad Mostaque, founder and CEO of London-based AI start-up Stability AI, once said in a Forbes interview, "I can be quite convincing." He certainly proved it in the fall of last year when he secured a funding round of about $100 million for the operator of the image generator Stable Diffusion within a matter of days.

Normally, investors take several months for their due diligence. However, the fear of missing out on a crucial deal in the hype surrounding generative artificial intelligence likely weighed heavily on the US venture capital firms Lightspeed Venture Partners and Coatue. These investors are by no means alone in making quick decisions. According to a survey conducted by Austrian early-stage investor Speedinvest among 437 European startup investors, 42% have made investment decisions based on a gut feeling – sometimes even during their first meeting with the founding team.

This is not a good idea, as illustrated by the case of Stability. Mostaque, who claims to have taught himself programming within a short period, faces allegations – such as inventing partnerships with the World Bank, OECD, and the WHO as well as creating the impression that Stable Diffusion was developed by Stability, which is not the case. Recently, many senior employees have left the company. Whether Stability can maintain its billion-dollar valuation under these circumstances is at least questionable.

In June, Lightspeed made another bet on a startup in the generative AI field. French Mistral AI, which is reportedly on the brink of a second funding round according to a report by "The Information," was initially touted as the future European answer to OpenAI shortly after its founding. This, in typical start-up fashion, may sound ambitious at first. However, in this case, the founders can boast a wealth of proven expertise in their field. They all have studied artificial intelligence and bring years of experience from the AI departments of international tech giants like Google and Meta.

Of course, this is by no means a guarantee for a breakthrough like ChatGPT. However, in hindsight, the VC investors can at least not be accused of investing in founders without genuine expertise. This also helps to enhance their reputation.