Venture Capital firms leverage AI technology for automated deal discovery and evaluation.
Venture capital firms in India are increasingly relying on artificial intelligence (AI) and automation to streamline their operations and enhance efficiency. This shift mirrors the advice these firms often give to their portfolio companies.
By adopting AI and automation, firms aim to automate up to 80% of their tasks, allowing them to focus on strategic investment decisions. Tools like GenAI, Airtable, and Zapier are being utilized to manage communications, conduct research, generate content, and perform data entry, among other functions.
Auxano Capital, a deeptech-focused firm, has already automated about 30-40% of its recurring tasks. IvyCap Ventures, on the other hand, has set an ambitious goal of automating 60% of its end-to-end deal flow, investor management, and portfolio oversight by the end of the year.
The push towards automation is driven by the growing complexity and volume of work that venture capitalists manage, particularly the need to sift through a high number of startup pitches and investment opportunities. AI and large language models are proving transformative in this regard, automating tasks like evaluating pitch decks, managing communications, and even carrying out preliminary due diligence.
Good Capital, an investor in startups such as Meesho, Apnibus, Solar Square, and Orange Health, has taken automation further. The firm estimates that 70-80% of its internal tasks are now automated. This automation not only speeds up screening and improves accuracy but also ensures a seamless workflow and high deal velocity without compromising on the quality of evaluation.
While automation is proving effective in the heavy-lifting stages of deal sourcing and initial analysis, a human touch is still essential in venture capital decision-making. AI may be adept at sifting through large datasets to identify potential investments, but strategic decisions largely depend on human judgement.
Despite these advances, venture capitalists believe that fully automated dealmaking remains a few years away. The human touch, with its ability to understand founder vision, chemistry, and team dynamics, remains crucial in early-stage investing.
As AI and automation become more integrated into venture capital workflows, there is a growing trend of collaboration between AI startups and VC firms. Partnerships like the one between Microsoft and Yotta are focused on advancing AI innovation in India, indirectly supporting VC firms in leveraging AI technologies for better deal sourcing and management.
While the adoption of AI by VC firms goes beyond investing in AI startups, it is clear that AI is playing an increasingly important role in the investment landscape. The human-AI partnership is proving to be a potent combination, leveraging the strengths of both to make more informed and efficient decisions.
- In an effort to optimize their portfolio management, venture capital firms are adopting AI and automation technologies, aiming to automate up to 80% of tasks.
- Tools such as GenAI, Airtable, and Zapier are being utilized by these firms to manage communications, conduct research, generate content, and perform data entry tasks.
- Auxano Capital, a deeptech-focused venture capital firm, has already automated about 30-40% of its recurring tasks.
- Good Capital, an investor in various startups, has automated 70-80% of its internal tasks, enhancing the speed and accuracy of its deal screening while maintaining a high standard of evaluation quality.
- Collaborations between AI startups and VC firms, like the partnership between Microsoft and Yotta, are becoming more prevalent, supporting VC firms in leveraging AI technologies for better deal sourcing and management.
