Considering the tech evolution from the past 24 months, where is the market going, what does it look like in five years and how does it calibrate to the VC industry? And not only from a perspective of asset class emergence against all sorts of themes but also from an execution perspective, i.e. how do you equip your shop by using AI in a smart way in order to tackle the map plan and align it to KPIs and values.

I spent quite a bit digging into where the AI-enabled tech is at the moment, what you can do and is yet to be done in multiple directions, all with a business model hat. Ended up with a few directional tools and product ideas which I discuss below. It's exciting!

 

 

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AI and VC

Considering the tech evolution from the past 24 months, where is the market going, what does it look like in five years and how does it calibrate to the VC industry? And not only from a perspective of asset class emergence against all sorts of themes but also from an execution perspective, i.e. how do you equip your shop so you can tackle the map plan and align it to KPIs and values.

We're already in the middle of a market consolidation - scale is important i.e. big VC players turned into asset managers with multiple non-VC plays, while on other segments there's an emergence of niche players increasingly specialising their craft. Nothing to do in the middle though where every VC promises an identical proposition to a pool of founders over-served by the market and which have become much more sophisticated than a VC product that frankly has stayed the same for the past 20-30 years. This creates some sort of a no man’s land in between and we're already seeing funds not raising anymore, closing shops or just ghosting the market in order to save face and remain employable.

My intuition tells med that, slowly and surely, we're going towards asset managers becoming software companies with a VC model, which will increasingly build branded balance sheet assets with intangible value and a sustainable competitive advantage role - some of which with commercially scalable potential. The best in class tech-driven ones are focused strictly on utility and intrinsic value, no bells and whistles and zero PR, and keep their devel under the radar as much as possible, as lean as possible.

Also worth noting that today the majority of investors still treat tech spending as a necessary cost not as a competitive advantage and this will make a difference in the long run. It's not because they don't want to, but because it's counterintuitive for an op that relies mostly on building social relations with other people - more so, tech is not correlated directly to the business model of cashing annual fees and waiting 10 years for producing DPIs. 

With this as a context, I put below a list of directional ideas for specific AI-enabled tools that can be differentiating software plays in a VC business model, and augment their market position.

1. Scoring engine for estimating probability of startup success

• if you put good data and math to work, this can be super powerful, I know of many existing variations already in use in the market.
• can be customised based on risk appetite, investment thesis etc and benchmarked against what's in the industry, or existing unicorns in the space, and/or at the same age.

2. Automated benchmark against other peer investors portfolios

• correlated to the anti-portfolio tracker

3. Automated path to next round for new portcos

• milestone plan suggesting timelines and targets such as KPIs against a capital efficiency plan until the next financing event

4. Generate a list of potential best-in-class hires customised to a portfolio startup's need based on the above path.

• i.e need a top GTM guy able to execute from 1M to 10M in consumer finance 

5. Ditto for a potential list of customers to get to next round's KPIs

• both hires and customers lists can be handled as an agent on top of the CRM suggesting intro paths based on existing rolodex.

6. Ditto for next rounds investors all the way to liquidity

• while this is straightforward, a nice add-on here can be creating a pool of non dilutive finance providers that can be made available to a startup based on their cap needs and complementing equity. 
• alas not much AI required here, and not very related to a core VC's business model (though GC is in this business already, for example) - cool and lucrative from a startup pov nonetheless. 

7. AI Plan B 

• i.e. generate a list of would-be investors for liquidity events, for when the shit hits the fan (it always does). 
• you can even go crazy and build an automated marketplace for investors that can express tentative interest in one or more assets from portfolio 
• while the pipeline is required, they can be activated once a portco is below the projected growth trajectory and odds work against hitting portfolio's overall target.
• it's a hedge play, good investors work the market up and down the value chain anyways, question is how you conceptualise the risk appetite span with AI.

8. Startup updates automation

• that's aggregated and automated with signals benchmarked against the above-mentioned path to next round, other in the industry etc
• investors already have this in a basic format, but need to put some AI to work in order to 10X the value of a dumb spreadsheet/LP email update.

9. Outbound sales funnel automation

• i.e. angels, advisors, scouts incentive scheme correlating their performance to the portco performance
• use AI to keep the sales names list refreshed 
• correlate to ulterior series round investors marketplace, as described above. 

10. VC clones

• automated VC agents mimicking individual personas, passive as smart knowledge repositories with a ChatGPT-like interface or dynamic by turning them into AI agents with custom automations - i.e outbound emails (no more ghosting) and CRM synch, answer *some* other emails, blindspots etc 
• more agent automations that are rather industry agnostic but improve 10X work efficiency in the back office - accounting, due diligence, legal, CRM updates etc.
• if done right, the future of a handful of humans managing an army of agents is closer than you'd imagine - software op, mostly AI native, with a VC model, that is.

That's just some quick thoughts and YMMV - worth noting, I kept in mind the context of both providing direct value add to a portco and building a data-driven playground for market signals and actionable insights. I didn't even consider sourcing which is a substantive discussion in itself and which any seasoned investor has likely been invested plenty in multiple ways already. 

Those can be nice-to-have features or standalone products - not as straightforward to build (i.e not a job for the usual platform guy because you need a bit of a vision and holistic knowledge) but easier to conceive now that AI models are fairly available on on-demand basis. Also, while they may look cool in a vacuum, those ideas would work better if aligned to a VC DNA and existing legacy. And as important, I'd evaluate them against a quantifiable value - need to either save money or produce money, or both - and so they can be commercial and/or marketing-driven, as some tools may be strategically kept in stealth while others can augment their value by putting them in the market. 

 

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Intel

Deals

🇸🇪 ​Cytely​, developing a SAAS platform using data-driven microscopy for biomedical research, raised a seed round with Icebreaker VC.

🇬🇧 ​FinCrime Dynamics​, developing an AI tool for financial crime analytics, raised seed funding in a deal led by Oxford Capital, joined by Twin Path Ventures and Syndicate Room.

🇫🇷 ​Tetmet​, producer of alt materials for manufacturers within auto, space, construction or defence business, raised $1.3 million pre-seed with Sequoia Capital, id4 ventures, Material Ventures, Climate Club, Wendel, and Super Capital VC.

🇫🇷 ​Rman Sync​, developing a SAAS tool used by purchasing and supply departments for demand forecasting, raised a seed round of $2.4 million from CEN Innovation and Normandie Participations.

🇮🇪 ​Jentic​, building an integration layer for AI agents, raised $4.2 million in a pre-seed funding round led by Elkstone, joined by Sure Valley Ventures, TechOperators, and Shuttle.

🇩🇪 ​Apheris​, selling federated computing SAAS to life science companies, raised $8.3 million series A co-led by OTB Ventures and eCapital, joined by Octopus Ventures, Heal Capital, LocalGlobe, Dig Ventures.

🇩🇰 ​Eupry​, developing smart wearables used for temperature monitoring in logistics, raised $23 million series A with investors led by Chr. Augustinus Fabrikker.

🇩🇰 ​Flatpay​, selling mobile payment solutions to retailers, raised $60 million with Dawn Capital, Hedosophia and Seed Capital.

 

Investors

🇸🇪 Nordic Capital announced a second mid-market fund, closed at ​€2 billion​ hard cap within 3.5 months.

🇫🇷 Expansion Ventures announced a first closing of ​€137 million​ for a fund dedicated to aerospace and defence startups in Europe.

• fund launched in 2023 by two French (​1​, ​2​) and two Swedes (​1​, ​2​), with a final target of 200 million.
• have made ​9 deals​ thus far. 

🇩🇰 Den Sociale Kapitalfond raised ​$90 million​ for a second fund dedicated to social impact - namely investments in areas with overlooked or unresolved economic and social potentials.

🇩🇪 ​An ex-German army officer​ launched a ​fund of fund​ targeting Central and Eastern European venture capital funds. 

• ​same guy​ also co-founded ​a defence startup​ that's raised some 11 million from NATO's VC fund, Project A and Discovery Ventures last year.

🇫🇷 Sia Partners sold a minority stake to Blackstone for ​€250 million​, valuing the company over $1 billion.

• Sia is a French consulting company founded in the 1990s doing about €500 million in revenue, 40% of which is in France and 30% in the United States. 
• it also did some ​occasional investment deals​.

🇫🇷 French insurance company La Matmut acquired HSBC's life insurance business in France for ​€925 million​.

• HSBC Assurances Vie has €20 billion in assets, a net income of €77 million and a Solvency II ratio of 287% in 2023.

🇳🇴 MTIP and Peakstone acquired from investors in Norway a ​major stake​ in a local developer of healthcare competency management software, as the startup aims to consolidate its American position as well as expand to Germany and Singapore.

🇩🇪 Lilium, producer of electric airplanes that's been declared insolvent a month ago, announced reaching a ​€200 million​deal with a group of local investors in Germany.

🇩🇪 Volocopter​, another producer of electric planes competing with Lilium with an air taxi model, ​announced​ that it filed for insolvency.

• the captable includes a bunch of corporate names as well as professional investors such as Team Europe, Blackrock, and WestTech Ventures.

🇺🇸 Founders Fund is looking to raise ​$3 billion​ for a third growth equity fund.

 

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