Maybe a focus on AI at the application layer could create avenues for smaller funds to partner with AI startups that might not yet fit the $5-10B outcome mold since those bets are foundational infrastructure plays. Aside from ChatGPT there hasn't really been an AI App that has captured the anticipation the normie market is being hyped on. While no one knows what the market will look like in 18-24 months its a pretty good bet that data aggregation tools will be necessary to unlocking the value of intelligence. Though the domain (foundation model) experts are going to the multi-stage firms to back their startups, AI application development doesn't require a PhD in physics or mathematics. Like the transition from on prem to cloud, we're in the period where great technologists, though not domain experts, are beginning to use the technology & run with it. Perhaps taking a closer look at legit technical teams with AI Applications focused on solving a problem is a good bet that will materialize as the market starts to figure out there is more money to be made in this market than just betting on the infrastructure. Like Instagram, Slack, WhatsApp, LinkedIn & others a focus on companies that have the potential to be acquired to expedite larger offerings later is a solid bet.
Disclosure: I'm making a case for why backing OLY.AI is the smartest thing an early stage VC could do.
It sounds like a good play is to service the undeserved founders to unlock alpha by going where the big funds aren't, where they can also get a discount on valuations
Maybe a focus on AI at the application layer could create avenues for smaller funds to partner with AI startups that might not yet fit the $5-10B outcome mold since those bets are foundational infrastructure plays. Aside from ChatGPT there hasn't really been an AI App that has captured the anticipation the normie market is being hyped on. While no one knows what the market will look like in 18-24 months its a pretty good bet that data aggregation tools will be necessary to unlocking the value of intelligence. Though the domain (foundation model) experts are going to the multi-stage firms to back their startups, AI application development doesn't require a PhD in physics or mathematics. Like the transition from on prem to cloud, we're in the period where great technologists, though not domain experts, are beginning to use the technology & run with it. Perhaps taking a closer look at legit technical teams with AI Applications focused on solving a problem is a good bet that will materialize as the market starts to figure out there is more money to be made in this market than just betting on the infrastructure. Like Instagram, Slack, WhatsApp, LinkedIn & others a focus on companies that have the potential to be acquired to expedite larger offerings later is a solid bet.
Disclosure: I'm making a case for why backing OLY.AI is the smartest thing an early stage VC could do.
It sounds like a good play is to service the undeserved founders to unlock alpha by going where the big funds aren't, where they can also get a discount on valuations
Great post! It's always challenging navigating these hype cycles. So fun to participate in them, but they very rarely end well...
Everything I belive a small fund GP should think about, and more!