There's rising interestโand apprehensionโabout AI disrupting venture as we know today. The question many ask: Will AI make venture obsolete? My take: It depends on the stage of investing. Here's how AIโs role could evolve across stages:
๐ญ. ๐๐ผ๐ป๐๐ถ๐ฐ๐๐ถ๐ผ๐ป ๐ฆ๐๐ฎ๐ด๐ฒ (๐๐ป๐ด๐ฒ๐น/๐ฃ๐ฟ๐ฒโ๐ฆ๐ฒ๐ฒ๐ฑ)
Often branded โthe lottery round,โ this is the most data-deficient stageโinvestments are often guided by intuition, not numbers. The investment decisioning is more around Idea and the Founder, specifically,
โข ideaโThesis Fit: Does the startup echo your deep convictions and sector vision?
โข FounderโMarket Fit: Do these founders truly own this problem space?
โข Unique Insight: Have they surfaced an earned insight others havenโt?
Some investors employ ๐ฑ๐ณ๐ฐ๐น๐ช๐ฆ๐ด ๐ฐ๐ณ ๐ง๐ช๐ญ๐ต๐ฆ๐ณ๐ดโ pedigrees (IIT/IIMs, ex-Unicorn employee etc) or TAM checksโwhere AI could still help, but its largely ๐ป๐ผ๐ป-๐ฎ๐น๐ด๐ผ๐ฟ๐ถ๐๐ต๐บ๐ถ๐ฐ ๐๐ฒ๐ฟ๐ฟ๐ถ๐๐ผ๐ฟ๐: AI may support but cannot replicate the nuanced, conviction-based decisions. While every investor would love to have an AI Agent summarise a deck, projection into crisp pointers, even draft SHAs, it cannot, IMO, do more at this stage.
๐ฎ. ๐๐ฎ๐ฟ๐น๐-๐๐ฟ๐ผ๐๐๐ต ๐ฆ๐๐ฎ๐ด๐ฒ (๐ฆ๐ฒ๐ฒ๐ฑ-๐ฆ๐ฒ๐ฟ๐ถ๐ฒ๐ ๐)
Now data begins to flow: product metrics, customer behavior, competitive signals.
โข ๐๐ ๐ฐ๐ผ๐ป๐๐ฟ๐ถ๐ฏ๐๐๐ถ๐ผ๐ป: Scales diligence - both financial and legal, uncovers hidden patterns, stress-tests assumptions.
โข ๐ฆ๐๐ถ๐น๐น ๐ฐ๐ฟ๐ถ๐๐ถ๐ฐ๐ฎ๐น: Team chemistry, category creation instincts, timing and narrative.
At this junction, AI becomes a powerful ally. Employing AI agents could shrink the Analyst team at most VCs, and this is where AIโs Agentsโ Tracxn -type moment could emerge (Tracxn simplified Deal Discovery and early research, almost re-writing the whole deal discovery process).
๐ฏ. ๐๐ฎ๐๐ฒ ๐ฆ๐๐ฎ๐ด๐ฒ (๐ฆ๐ฒ๐ฟ๐ถ๐ฒ๐ ๐+)
This resembles private equity investing: revenue, churn, CAC/LTVโall measurable.
๐๐ ๐ฒ๐ ๐ฐ๐ฒ๐น๐: Identifies anomalies, benchmarks performance, forecasts growth.
๐๐๐บ๐ฎ๐ป ๐ฒ๐ฑ๐ด๐ฒ ๐ฟ๐ฒ๐บ๐ฎ๐ถ๐ป๐: Spotting outlier potential, negotiating valuation, evaluating moats.
IMO, late-stage investment processes are prime breeding grounds for AI Agents - automates most workflows across discovery, diligence and portfolio management.
Across all these stages, what AI Agents cant replace is ๐ฟ๐๐๐ก ๐๐๐ ๐๐ฃ๐ - the negotiation, understanding difference between value vs price and the nuances in the deal closure.
AI is transforming venture investingโbut only where robust data exists. At the earliest stage, where vision precedes validation and conviction trumps charts, human conviction remain indispensable. Iโd love your thoughts:
โข Where do you see AI drive the most value?
โข Where do you think AI falls short in VC decision-making?
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