Listen to the AI-Generated podcast of this article
If there is one thing that I have learnt working in venture is that the most risky, exciting and rewarding stage to pick the winners is the early stages - AI just making this reality more extreme.
In the last 3 years two things changed in AI:
1) We move away from the Unicorn status of success to a more commercial success metric the $100M ARR metric.
2) AI demand, adoption and technology accelerate the timeframe which a company can start until they reach the $100 ARR milestones really short. Some companies like Lovable, Manus AI and Cursor got to that milestone in less than 12 months.
What does that really mean to VCs? it means that VCs who were used to take the time, to see who is getting traction, how markets are evolving don't have that time.
Things are moving so fast that they have to be the first ticket and make the early bet.
What I see in the venture industry is that VCs are shifting their attention in many ways to adapt to that speed of scale and to the new characteristics of outlier companies and founders:
1) It is clear by this new data showed by Dealroom that the biggest winners are the early investors (the accelerators or the angel groups) like YCombinator, SVAngels and Plug & Play. They have huge portfolios which allow them diversification and making many bets at the very beginning.
2) All the greatest funds are now building mechanisms to go early. If we used to think about some of the mega-funds as ones that join mostly at the early growth series A rounds, they now go in as first cheque and even building mechanisms like acceleration programs and fellowships to get early signals.
3) The time for growth, does not give you even time to evaluate a company or startup idea - it's all about the founder. The funds that put the focus on identify outlier founders, the promising researchers, technologist and strategic minds, and try to analyse what make them win and build relationships with them are going to win the AI investment race.
My bottom line is that AI made venture what is venture is all about - bold and smart bets on amazing talented entrepreneurs. AI empowered them to build value faster in a speed the human mind and the economy might not follow.
👋 Hey there, I’m Illai. I share with readers questions, insights and learnings about building startups, venture capital, Artificial Intelligence and entrepreneurial career paths. You can find more: Follow me on Linkedin| Get updates about workshops and courses | ZIZO Product Course | Between App
Paid Subscribers will get exclusive access to more articles and insights, get an invite to my community and will get discounts for workshops and advisory. Subscribe Today.