(Yicai Global) July 18 -- Timing is critical when investing in artificial intelligence, and selecting technologies to back requires careful consideration, Gao Xinxin, co-founder of Jiangmen Zhicheng Venture Capital Co. (JVC), told Yicai Global at the NetEase Future Technology Summit.

"Our AI investment strategy is to invest in the darkness before dawn and focus on technology applications, business scenarios and timing," said Gao. "Technologies can quickly show their great potential and can create a demonstration effect."

All of the members of JVC's founding team came from the former Microsoft Ventures Accelerator's Chinese team, Gao said.

The JVC team, which boasts years of experience in dealing with companies and tech, values new technologies based primarily on their business application potential.

"The path to verify the value of an AI technology must start from applications at enterprises and then extend to uses among consumers," said Gao. "Early-stage applications at companies are crucial for promoting the development of new technologies."

With this perspective, JVC has invested in several AI applications in the medical, financial and transportation sectors. These projects often represent one link of an entire industrial chain.

A promising trend will show signs it is budding before blooming, such as attracting backing from major players, said Gao. All the titans have invested heavily in autonomous driving, signaling the start of a movement, she said.

Development paths can be very long and funds invest in technologies at different times, Gao said. JVC strives to invest in experienced top-notch talents that can innovate and realize the commercial value of technologies.

Startups and giants should interact rather than simply competing, she said. Giants are set to invest in innovations, she said. Solutions must become more differentiated as users' needs become more varied, and giants and startups need to work together to form an innovation alliance, she said.

To avoid being swallowed by giants, startups should carefully choose their target userbase as they start to build their businesses, Gao said. This will have a decisive impact on the shape, positioning and price of their products, she said. Firms must satisfy chief executives and the departments that use their products, she said. A company that chooses the correct users to target and snaps up a big market share can enjoy stable growth, she said.

The valuation of AI startups is rising rapidly, posing a big challenge for funds that focus on technology investments, especially newly-established funds.

"In late 2015, we felt very strongly that investors were cautious," Gao said. "This year, we feel very strongly that investors are more enthusiastic."

Funds want to see that a startup has technology experts and that it understands the industry, she said. The ability to work across industries is very important when fighting for time and speed. Investment groups will evaluate how quickly a team can grow its userbase. Few startups are strong in every way, she said.

About 350,000 technology-related companies are set up in China each year, JVC data show. Last year, 3,000 to 4,000 firms secured funding.

"This means less than 1 percent of startups in AI and other technological innovation fields will receive investments from investors," Gao said. "Will we miss one or choose the wrong one? We can only pick companies by adopting the approach we specialize in most."