Howard Morgan on AI, Global Venture Investing & Founder Insights | NVCA Award Recipient Series

This is the first of four episodes in a special series dedicated to the 2025 NVCA Award Recipients. To learn more about the NVCA and their work in crafting the future of Venture Capital, visit their website at https://nvca.org/. 

Highlights

• B Capital Group invests globally in multi-stage ventures with a strong focus on AI, healthcare, and frontier tech.
• The firm operates across the US, Southeast Asia, India, and emerging markets, balancing 75% US and 25% international investments.
• B Capital’s partnership with Boston Consulting Group uniquely supports portfolio companies with expert strategic guidance.
• AI is transforming industries, especially healthcare, with applications in diagnostics, robotic surgery, and drug discovery.
• Venture capital faces challenges of overcompetition, inflated valuations, and the need for more disciplined investment strategies.
• Morgan draws on his experience at Renaissance Technologies to emphasize data-driven decisions in venture investing.
• The future of investment lies in biotech, longevity, space, and robotics, with infrastructure and power as critical constraints.

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Summary

In this episode of The Innovators and Investors Podcast, host Kristian Marquez interviews Howard Morgan, chairman of B Capital Group and a prominent figure in venture capital. Morgan shares insights on B Capital’s global investment strategy, focusing primarily on B2B digitization, healthcare, frontier technology, and AI. He emphasizes the firm’s unique partnership with Boston Consulting Group (BCG), which provides strategic support to portfolio companies, enhancing their growth prospects. Morgan highlights the transformative impact of AI across industries, especially healthcare, and touches on the evolving venture capital landscape, including valuation trends and geographic diversification away from Silicon Valley.

Morgan recounts his distinguished career trajectory, from academia to co-founding Renaissance Technologies, a leading quantitative hedge fund, and later pioneering First Round Capital, the first organized seed-stage venture fund. He reflects on the importance of data-driven decision-making in both quant trading and venture investing, noting the increasing use of AI to evaluate founders and investment opportunities. Morgan discusses the current challenges in venture capital, including an oversupply of funds leading to inflated entry valuations and diminishing returns, and stresses the importance of structure and multiple partners in venture firms.

He also shares his thoughts on technology adoption, infrastructure challenges like power supply critical for AI growth, and the potential of longevity and biotechnology as future investment frontiers. Morgan underscores the importance of great partners throughout his career, both professionally and personally, and hints at his forthcoming memoir, “Pick Great Partners.”

Key Insights

• Founder and Market Focus Remain Crucial: While technology evolves rapidly, Morgan stresses that the founder’s quality and the size of the target market are paramount. A great founder in a small niche won’t generate the outsized returns venture capital demands. This highlights the delicate balance investors must strike between visionary leadership and scalability potential.
• Global Diversification Mitigates Valuation Bubbles: B Capital’s diversified investment approach across geographies like Southeast Asia, India, and the Gulf helps avoid inflated Silicon Valley valuations. This strategy not only spreads risk but enables access to high-growth markets where capital is more reasonably priced, providing better value opportunities.
• Data and AI in Venture Capital: Morgan’s experience at Renaissance Technologies informs B Capital’s use of AI to rate founding teams quantitatively, assessing factors like experience, domain fit, and track record. This fusion of quantitative methods with traditional qualitative judgment enhances investment decisions and portfolio construction.
• Infrastructure as a Rate-Limiting Factor for AI: AI’s growth is constrained by the availability of power infrastructure. Morgan underscores the gap between US and China in energy capacity expansion, noting that insufficient investment in power generation could throttle AI innovation and deployment. This insight points to a significant macroeconomic and policy challenge intertwined with technological progress.
• AI’s Disruptive Potential in Healthcare: Morgan highlights that AI applications in radiology and diagnosis are already outperforming human experts, demonstrating tangible benefits. This signals a paradigm shift in healthcare delivery, promising improved outcomes and efficiency, and positioning healthcare AI as a critical investment theme.
• Venture Capital Market Saturation and Returns Compression: The surge in venture funds and solo GPs has driven up entry valuations faster than exit valuations, leading to compressed returns. Morgan warns of the unsustainable nature of this trend and advocates for more disciplined fund structures with multiple partners to provide checks and balances, which is essential for long-term industry health.
• Longevity and Biotechnology as the Next Frontier: Morgan views biological sciences, longevity, and aging research as sectors poised for major breakthroughs in the coming decades. However, regulatory hurdles, such as the FDA’s stance on aging as a non-disease, currently limit investment opportunities. This emerging field requires innovative regulatory and investment approaches to unlock its full potential.

Extended Analysis

Howard Morgan’s career and perspectives encapsulate the evolution of technology investment over the past five decades. His early foresight about the internet and computing’s impact on business, combined with his pioneering role in quantitative finance, provide unique vantage points on the integration of data analytics into venture capital. The partnership with BCG exemplifies a trend toward operational support beyond capital, reflecting a more hands-on approach to venture investing in today’s complex markets.

The firm’s global investment footprint is particularly noteworthy as it contrasts with the Silicon Valley-centric model that dominated for decades. By strategically allocating capital to emerging markets with expanding digital economies, B Capital leverages growth trajectories fueled by digitization and AI adoption, capturing opportunities in less saturated environments.

Morgan’s caution around Silicon Valley valuations aligns with broader concerns about a venture capital bubble, intensified by AI hype. His preference for early-stage investments at reasonable valuations underscores a disciplined approach to risk and return, advocating for patient capital that nurtures foundational growth rather than chasing late-stage froth.

The discussion about infrastructure, especially energy, as a constraint on AI development is a critical macro insight often overlooked in tech conversations. The environmental and political dimensions of energy production will significantly shape AI’s scalability and sustainability, influencing investment priorities in both technology and clean energy sectors.

Finally, his reflections on longevity and biotech as investment frontiers reveal a visionary focus on how emerging science intersects with capital markets. The regulatory environment’s lag behind scientific advances points to a need for advocacy and innovation in clinical trial design, regulatory frameworks, and capital deployment strategies to realize the societal and financial benefits of these technologies.

Conclusion

Howard Morgan’s interview offers a comprehensive and nuanced view of venture capital’s past, present, and future. His blend of quantitative rigor, operational support, and global market awareness provides a blueprint for sustainable and impactful investing. The conversation highlights critical themes such as AI’s pervasive influence, infrastructure challenges, market dynamics in venture capital, and the promising horizon of biotech and longevity. For investors, founders, and technologists alike, Morgan’s insights serve as a guide to navigating an increasingly complex innovation ecosystem with discipline, foresight, and partnership.

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