by John Schmidt & Adrian Liddiard, Co-CEO & Co-Founders, WeFi Technology Group
The continual rise of AI is fundamentally reshaping industries, creating unprecedented opportunities and many challenges. WeFi Technology Group is positioned to be a strategic ecosystem partner, providing innovative working capital solutions necessary to help fuel AI innovation and growth…
Exponential Growth
AI-focused technology vendors are in a land grab to maximise their footprint across data centers around the globe. The initial wave of investments has been dominated primarily by the hyperscalers and model builders. Amazon Web Services, Microsoft (Copilot), Google (Gemini), IBM (Granite), Meta (Llama) and OpenAI (ChatGPT), amongst others, have spent tens of billions of dollars building AI capabilities and Large Language Models. The materiality of these investments, coupled with the accelerated time-to-market procurement cycle, are unlike anything the industry has ever seen. Not long ago, purchase orders in the tens of millions of dollars were considered sizable, and even those amounts strained the working capital of Distributors and Partners. Today, AI-related purchase orders can reach hundreds of millions of dollars, and for Distributors and Partners exposed to this market, this phenomenon of order materiality and speed to market has created additional working capital challenges.
New Wave
We believe a new wave of capital expenditure will be driven by Enterprise and Sovereign buyers who are increasingly recognising the value of their proprietary data and are hesitant to share it externally. This data-controlled approach is driving a trend towards building on-shore (localised) AI capabilities as organisations strive to harness AI’s potential while protecting sensitive and sovereign information. In comparison to the hyperscalers and model builders, this group of buyers will differ in many ways:- They are not concentrated but rather present in almost every country around the globe, across all industry verticals.
- They, for the most part, don’t possess the deep resources or technology know-how, as a result requiring a broader scope of services that in turn drives a longer procurement and deployment cycle.
- Their capitalisation and credit rating will be far more diverse, ranging from poor credit to high quality investment grade.
The Enterprise and Sovereign AI Ecosystem
To support this AI-driven growth opportunity, technology vendors will need to turn to an ecosystem of partners who can deploy and manage their technologies around the world. The adoption of AI technology by Enterprise and Sovereign buyers will be driven by industry use cases and economic outcomes. These solutions are complex, requiring domain expertise in sales and engineering. In addition, this global ecosystem of partners will face a multitude of financial challenges:
- Partner balance sheets that on the whole are not structured, nor are they sufficiently capitalised to support the working capital challenges that arise from either extremely large or very long AI procurement cycles.
- Partners will be faced with longer cash conversion cycles as the sales and deployment cycle shifts to a longer, outcome-based, hardware-software-service orientated model.
- Partner credit underwriters, from the technology vendors to the financial institutions to the credit insurance industry who today underwrite run rate credit capacity, will face further demands on ever-expanding and stretched credit lines.
In addition to the technology partners, the ecosystem will need to include:
- Partners who can provide deep expertise in architecting multi-currency, multi-country solutions that address foreign exchange and credit risk while at the same time ensuring alignment with ever-changing compliance, accounting, capital regulation and taxation structures.
- Partners who can provide global working capital solutions that are tailored to support the required credit capacity and terms, and in that way ensuring the necessary liquidity to sustain the AI investment cycle.
- Partners who can dynamically align a technology vendor’s financial needs to their business goals.
- Partners who can deliver AI-driven platforms that offer automated workflows, real-time data and customisable business intelligence, thereby providing valuable insights to decision-making and enabling enhanced operating efficiency.
Empowering the AI Ecosystem
The emergence of the Enterprise and Sovereign AI market, which will be driven by definable business outcomes, has the potential to give rise to an unprecedented growth opportunity. To take advantage, it is extremely important that AI focused technology vendors that leverage a channel go-to-market comprehend their financial challenges and incorporate global finance solutions as part of their execution strategy.
WeFi’s focus on customer-centric solutions, coupled with our global reach and seasoned expertise, positions us as a strategic ecosystem partner in the Enterprise and Sovereign AI revolution. With a comprehensive suite of financial solutions, WeFi is actively involved with technology vendors and channel partners around the globe, enabling the growth and deployment of AI.
