Venture Capitals have all the time focused on investing in companies that use technology to disturb established industries or create completely recent business categories.
But some VC begin to reverse the script in their investment styles. Instead of financing startups, they are purchased by mature companies – equivalent to telephone centers, accounting companies and other skilled service companies – and optimize them with artificial intelligence to serve more customers through automation.
This strategy, often compared to non-public equity development, is used by companies equivalent to General catalystIN Develop capitalAND Solo VC Sell Gil. General Catalyst, promoting this as a recent asset class, has already supported seven such companies, including Long Lake, a startup, which collects the Association of Home Owners to extend the improvement of community management. According to PitchBook data, Long Lake has secured $ 670 million since establishing lower than two years ago.
Although the strategy is still recent, several other projects costumes informed TechCrunch that they are also considering trying out the investment model.
Among them are Khosla Ventures, a company known from early plants for dangerous, unverified technologies with long development dates.
“I think we’ll look at some of this kind of possibilities,” said Samir Kaul, a general partner at Khosla Ventures.
Interestingly, this PE taste approach may be a surprising profit for many AI VC startups. If VC marks old companies with recent technology, startups of artificial intelligence who need to serve these industries, they’d mainly gain immediate access to large, recognized customers.
According to Kaul, such access could be helpful when recent startups have difficulty securing customers. At a rapid pace of changes in artificial intelligence, the variety of startups belonging to the market and historically long sales cycles related to the sale of enterprises, such difficulties apply to many AI startups.
But Khosla Ventures desires to watch out. “The companies we look at are very unlikely to lose money,” said Kaul, but he doesn’t want the technique to damage the company’s strong achievements. “My greatest stress in life is that I manage other people and I want to make sure that I will still be a good manager.”
While Khosla Ventures begins to “take care” in artificial intelligence, Kaul explained that the company wants to incorporate several offers to evaluate whether such investments bring strong returns for the company before collecting money on a vehicle specially directed at this investment strategy.
If early plants fall, Khosla probably works with the PE to assist her in her acquisitions and not hire a team. “We wouldn’t do it ourselves, we don’t have such knowledge,” he said.