'Supercharge' your VC firm

Change is afoot in VC - be a part of it in leading your firm in the software+data+AI transformation.

In a not-too-distant world where AI can drive a car, can it also steer the future of venture capital? Today we stand at the cusp of a sea change which will reshape the way we approach most aspects of VC. The buzz in the industry about applying generative AI has been largely directed towards making new portfolio investments which leverage this technology. However, I am not just talking about about investing in AI-based companies. Rather, the application of software + data + AI to automate the entire investment process is transforming the VC industry itself by changing how firms operate. For rising venture capitalists, this rare moment presents an opportunity to carve out unique expertise, distinguishing themselves as an invaluable asset to their firm, potentially leapfrogging their careers in the process.

Automating Venture Capital with Software + Data + AI

The opportunity at hand is to apply data-driven and AI-leveraged approach to all of the functions and operations within a firm. For example, data-driven sourcing and intelligent screening allow VCs to identify the most promising entrepreneurs more efficiently and more effectively than traditional bespoke network-driven approaches. It used to be that only specialist firms which were founded on data as their core competency and those largest platforms with in-house developer resources could take this data-initiated approach to sourcing. But now there are vendors from Gravity to Harmonic to Specter to Synaptic which can provide signals for identifying and highlighting startups that fit anywhere from pre-seed to late-stage. These can often be hooked into internal deal CRMs like Affinity and Braze to fully operationalize the sourcing function.

Applying software + data + and AI doesn’t just stop at sourcing, however, but can continue throughout the entire VC investment cycle from selection, winning the deal, portfolio support, to harvesting.

Along another vector, generative AI gives content producers superpowers in creating more with less time. Every aspect of written communication within and from a VC firm, both internal and external, can be augmented through simple and cheap tools. Personally, ChatGPT has become an invaluable go-to tool for me. Not just for public-facing blog posts and tweetstorms, but also for answering/replying to emails and internal communications. Perhaps most significantly for junior investors, you should never write an investment memo from scratch again. Just upload the PowerPoint deck of the investment you’re proposing, prompt the interface with the required section titles and parameters of your firm’s template, and voila. That document won’t be 100% ready for publishing, but surely 80% of the labor will be completed.

There are entire blogs which are solely devoted to the topic of applying automation, software leverage, data, and AI to the VC investment processes, so it’s not worth continuing with a mere cursory review here. My intent is to flag what’s happening and suggest you get on board now.

History Doesn’t Repeat, but it Rhymes

The current moment bears a striking resemblance to the advent of blogging among VCs nearly two decades ago. Then, a handful of forward-thinking VC investors recognized the potential of the internet to bring transparency for entrepreneurs to the once-opaque venture capital industry and investment process. Those who were early to adopt and evangelize blogging not only established themselves as thought leaders, but also significantly advanced their careers. At the time, blogging was viewed as a bit radical and taboo, and many LPs weren’t sure what to make of it. I launched my first blog post in 2005, and with open space to run I built an audience, which helped push me from a lowly associate at a first-time fund to VP at a top heritage firm within two years. And there I leveraged this social media expertise and know-how to make a name for myself within the firm.

Fast forward two decades, there are investors who have built their entire careers upon leveraging social media for distribution and deal-sourcing. Just like then, there are naysayers now who will prefer the bespoke nature of their “proprietary” deal flow or worry that if all VCs embrace these tools then it’s just a race to the bottom of being on par with others.

I see a parallel opportunity now for non-partner VCs to embrace what will always be a changing industry. It’s currently dividing between those who are embracing this approach towards automated VC, and those who are happy to be stuck in the way things have been done.

Become the Champion of Change

The call to action is clear: become the generative AI and automation champion within your partnership. This means not only advocating for the adoption of these technologies, but also becoming proficient in their application across all stages of the investment process to supercharge your VC firm. It involves continuous learning, experimentation, and sharing knowledge with colleagues and portfolio companies alike. Push your partnership forward to a place where they become reliant on you for continuing newly-found automated progress.