can AI replace the job of venture capitalists?
our firm recently ran an experiment to evaluate how effective AI can be for routine VC tasks such as pitch deck review, industry/company research, and investment memo drafting.
we built an internal tool we call the “AI Investment Analyst” and tested it over roughly six months.
as mentioned in the full write-up, our primary goal wasn’t to see whether AI could make better investment decisions than humans, but rather whether it could meaningfully improve overall productivity within the firm.
I thought the were interesting enough to share, and I’m curious how others see the outlook of career paths in the VC industry evolving with tools like this
In short, after deploying the AI analyst, we achieved:
- 87.5% alignment between the AI’s recommendations and our human investors’ decisions
- Investment memo drafting time reduced from ~1 week to ~1 hour, and the overall review cycle shortened from 4–6 weeks to about 1 week
The only way to assess perf is to check whether it enabled you to
1. Cut costs
2. Improve fund performance
Anything else such as '''alignment''' with human decisions, is irrelevant, especially if it's not done in a scientifically rigorous manner. AI will easily agree with you on buying Apple.
that’s true, but we designed the agents to follow our own investment thesis and framework, not just give “common sense” answers
so they don’t simply agree with startups that seem to make sense on the surface, and they don’t just behave like chatgpt
Sounds like it just makes an analyst's job easier but it doesn't replace the sourcing and networking components which are the core components of being a VC.
No, because a big part of the job is getting access in the first place. VC returns are not long-tailed like in buyout and a handful of companies disproportionately drive outcomes. Once you’re past Series B, name of the game is getting access to those companies and effectively “being allowed” onto the cap table.
that is true
I think ai transformation will be more disruptive for earlier stage firms than later stage firms
due to the reason you mentioned
I already use AI everyday just to research some basic stuff about some industry and its landscape, existing product offerings for each company, strengths and weaknesses, etc... Also in tech, researchers often come up with concepts for products decades before they can come to market - these are all publicly available so AI is pretty great at explaining those too.
Using that information to infer product and experiential gaps + finding and assessing people who can fill in those gaps in the most brilliant and efficient ways is a very much "in-person" thing that AI can never help with.
You gotta do the work to figure out where their network is.
how do you assess whether a person can fill in that 'gap' or not?
what kind of qualities do you look at
Keep in mind that my "system" is still a work in progress & that I'm not experienced enough to know every case. I rely a lot on my intuition, insights from studying successful entrepreneurs, and insights I gained observing lot of failed entrepreneurs. So a spoonful of salt would be nice to bring.
The most important thing, obviously, is to determine if someone is capable of running a functioning business rather than just being great at one thing.
This basically comes down to a few things - can they consistently create great experiences (eyes on the true goal), can they stay on top of the tech and other innovations to support this (know enough about the implementation and operation), are they capable of innovating (good in a crisis?), and do they know the difference btw when they should STFU and listen to people vs when they should get others to STFU and listen to them (are they capable of growing).
It's a lot easier to assess if they already have an MVP/product. Also a must if they understand what situations they can handle easily vs what they need to learn from others.
Often I find that most entrepreneurs will try to speak to only one or 2 of these criteria yet they still act like they know everything.
Should add on here that what these 4 things I look at tell me is whether the team is able to fill an organizational gap rather than just a "product gap". Some organizations are obviously suited better to fill in certain product gaps. It takes great entrepreneurs to be able to innovate the way they fill in an organizational gap, and great ones always figure out a way to do this in a way where the product gaps they are capable of filling in have strong synergy.
Ofc, it'd be crazy if I expected them to be amazing at everything. But they do need to be aware enough so they can learn to successfully hire, plan, or execute themselves.
oops wrong thread
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