Still early: Jonathan Belz on the AI platform shift

BFA Co-Founder and Global CEO Jonathan Belz joined Tim Whybourne on The Exchange to discuss the AI platform shift, where value is accruing, and how BFA accesses late-stage US private companies through the new BFA Frontier Fund.

The conversation covered the race for compute and energy, the move from building AI to deploying it, healthcare as an underappreciated theme, and why the most compelling companies are staying private for longer.

I truly think that people do not appreciate how early we still are. I think this is a multi-decade trade.

Five takeaways from the conversation

Value creation has moved private

Jonathan puts the share of US companies with more than US$100 million in revenue that remain private at 85 to 90%, up from 60 to 65% five or six years ago. The collapse of Credit Suisse and Silicon Valley Bank also pushed previously closed funds and companies to court global LPs, including investors in Australia and Asia.

Demand is outrunning supply

The dot-com comparison breaks down on one point. "The demand curve for this technology is far outstripping the supply curve." Energy and data centre build times cap compute, and today's build-out meets a single-digit percentage of demand. AI has generated more than US$100 billion in revenue in under three and a half years. SaaS took 15 years to reach the same mark.

The risk Jonathan watches is financing. "That's more a funding bubble than it is the actual bubble of the technology itself." Quality of revenue, counterparty risk and funding mix now matter more than they did at the picks-and-shovels stage.

The next phase is diffusion

The build phase ran on brute force: more models, more data, more energy. The next phase rewards adoption, measured by how efficiently enterprises and consumers turn AI into return on investment. Average AI spend sits under US$1,000 per employee globally. "The question is gonna be how quickly can we create productivity and real impact in enterprise."

Healthcare: start with the boring problems

Healthcare accounts for 18% of US GDP. BFA passes over pitches promising AI will cure cancer and looks instead at workflow integration, data permissions for therapeutics and bottlenecks between service providers. Fixing that friction can turn lower-margin businesses into higher-margin ones, across a market measured in trillions.

Humans are the bottleneck

BFA's recent US study tour confirmed the depth and youth of the talent pool. The binding constraint is the layers of systems built in previous cycles, and decisions enterprises have yet to make, such as whether to build on frontier models or open source. "Now those decisions can't be ignored anymore."

How BFA accesses the opportunity

BFA builds from the bottom up. Commitments to leading US managers through the BFA Vintage Fund earn the seat at the table, and those manager relationships lead to direct co-investments. Jonathan compares it to the labs and their chips: "The infrastructure layer when it comes to investing, in our view, is having the right chip companies, which are essentially the GPs."

Working across many managers gives BFA a view of the whole ecosystem, rather than one fund's co-investment pipeline and its biases. Timing follows from that. "By the time something's in the paper, it's probably a stage or two too late for us."

The BFA Frontier Fund packages BFA's highest-conviction direct ideas into one concentrated portfolio of US companies from Series B to D+, averaging Series C. These businesses typically carry tens to hundreds of millions in revenue and valuations of roughly US$1 billion to US$15 billion. The fund runs a five-year term and returns capital as it is realised. Jonathan points to three exit routes within that window: M&A from hyperscalers and private equity, a reopening IPO market, and secondaries.

On portfolio construction, his advice is to treat the theme as an allocation and size it deliberately. "The SaaS cycle created 25 trillion. I would argue this is magnitudes bigger than that, and probably faster."

Listen to the full episode

Hear Jonathan's full conversation with Tim Whybourne on The Exchange, including his views on AI safety, US–China alignment and how he expects investors to look back on this period.

Listen to the episode here.