Now, joining me to discuss this via Zoom is Lea Muller Pena, an entrepreneur and strategist working at the intersection of AI, digital assets, and capital markets.
Leah is also a founding partner of ATA Institute.
Ms.
Pena, thank you so much for joining us today.
Hi, thank you so much for having me.
So, first question to get right thing.
Thank you.
So, AI and digital assets are crossing from uh speculative bets into core infrastructure and from an investor's standpoint, what signals that the technology has been institutionalized and becoming an allocation point rather than a venture punt?
Yeah, I think what we're seeing or what I say is the hallmark of institutionalization is really when we move from a sort of venture model to an infrastructural model, right?
Are we in need of more patient capital?
Is regulation going to become an incumbent or not to the strategy of the business?
And I think when we look at those combinations, um, the UAE.
Has set a really interesting precedent that kind of paralyzes to the US's approach.
And so I think really that's kind of how we see venture moving to, are we fundamentally having to create new policy because these are new categories?
And are we looking at a venture return of 10 years or are we actually looking at an infrastructural build for the next 30 years?
And we know that sovereign wealth funds and state actors are now moving faster than private capital on AI and digital infrastructure.
So, why are they leading and how should Wall Street read that as a market signal?
I like to call this a transition from sort of the Silicon Valley model, which is we look at the innovation, we fund it with venture capital, and then maybe we do regulatory work and we're seeing this in the US right now, you know, look at how the crypto and blockchain industry has had to sort of fight through the SEC and now also with the Clarity Act, a lot of it is done kind of postmortem, right?
It's reactive policy.
What we've seen in the UAE and the Gulf region is actually a more prepared approach where, you know, think alone of the UAE 10 years ago already having a ministry of AI and sort of cascading into building MGX, which is a big fund $40 billion and then leading the infrastructural model.
What we're seeing in the UAE is that the strategy is born together out of national strategy.
And then that is sort of leading investment to the region and it's being reviewed as an infrastructural play, meaning there is more coordination and there is more syndication versus this more disjointed model that we've been seeing in the US and I think that preparation is why the UAE is going to be able to sustain and own ultimately this new capital formation around the requirements that the capex of say AI and blockchain also have over the next 10 years.
And let's talk a little bit more about the cycle that's being financed differently.
The capital is flowing into uh compute data and energy, not just software, but what new capital formation models are emerging to fund infrastructure, especially at this scale, and where does the return actually come from?
Yeah, so To your point, like the question right now is not who's going to own or innovate the frontier model as much anymore.
The UAAE looks at who can actually sustain it infrastructurally and then who is owning the different layers.
So that's compute, electricity, etc.
Those are actual fundamental to make sure that the models that are built can actually be mass disseminated and institutionalized.
Um, you know, there is a speculation of this AI bubble and.
Where does that stand?
I think on the valuation side we do have a bit of froth, right?
But I think the pricing one on the demand is clearly not going to drop.
And so I think that's where the return is coming is especially at a world that is kind of moving and changing a lot geopolitically.
It's the regions that can provide stability to the infrastructural components like energy compute and policy candidly.
To these innovations, um, I do think they're going to sustain, and that's where the return comes from, that once you own that stack and once you own the conversation around the policy, you can actually dictate the next 10 years as well of the dissemination.
Um, it is in a way the birth of a new, let's say, sovereign kind of capital venture model that definitely has more patient capital and Ego doesn't have to make such kind of, You know, Silicon Valley type decisions that are often driven by shareholder value only.
This is driven out of a national strategy and national budgets, and so we have um more patience to actually create prudent long term infrastructural plays.
And so, let's talk a little bit more about the biggest deals being made right now.
They now require government, investors, academia, and industries to move together.
So, when all that alignment works together, what unlocks for capital and where does it often break?
So, in terms of the breakage model, I do think that the traditional models that we've seen in the US are causing this friction, right?
If we look at like, say, the anthropics of the world and how, you know, even alone this week we had the launch of Fable and then we had the US government sort of pull the strings on that.
It's when you have disjointed incentives and disjointed alignment, it creates a friction in the innovation cycle, right?
And that's where when instead, like the UAE did do.
Right, from creating this ministry of AI to actually creating talent visas to then creating MGX as a fund to then now having obviously these kind of gigawatts of compute in their investment portfolio, that creates a cohesive long term narrative.
And when I look at capital formation, it's difficult in the US to see how much dependency it does my capital have of actors that are choosing to change things at a whim, right, to policy that doesn't feel cemented.
To a clarity act that may or may not change things for kind of digital asset players in the region.
I do think that is where there is a safety by going into regions like the UAE that have actually decided we're going to do this policy first.
There will be no large seismic shifts to that, similar to what we saw now with anthropic happening earlier in the week.
And we know that the Gulf is allocating on a long horizon while much of the market chases the next quarter.
So, what is that patient capital getting right and what is the lesson for global investors?
I think um as a technologist myself and as someone who's kind of straddled AI and data architecture and that's what led me to blockchain, there's this concept of single point of failure and myself, if I look at any investment, I would want to offset that risk, right?
And so these longer term horizons allow for a more distributed infrastructure to be built, right?
For when there is a geopolitical tension of data centers are being affected by that, like we saw now in the tensions in the Middle East.
How do we create a long term strategy where that doesn't cause outage or sort of capital loss.
Now, that does require a sort of slow and steady approach because you are building, you know, physical infrastructure as well.
I think the Return or the pump and dump narratives that we've seen predominantly, orbit fronted technologies in the past decade, are now in a maturation phase which is the stage of institutionalization and that will be moving forward.
So for investors, I think that's a really interesting signal is to now say, OK, if you don't have the request for it to be a short-term investment cycle and your return on investment wants to be steady and calm, then think of the layers.
I wanna thank you so much for your time, Ms.
Pena.
Appreciate everything that you've said and uh all the information you've given us.
