Not All VCs Are for AI

Not every VC firm should be chasing AI companies.

Top AI startups (the unicorns in the making) are already spoken for behind the scenes by top VC firms. Think Sequoia, a16z.. they've already scooped up (or continuously will) AI startups with the most potential for true 'unicorn status' AI value: Think AI infra or orchestration plays, new AI foundational models, AI-enabled enterprise security, etc.

VC firms looking for AI startups that are not these special ones will likely see these startups be replaced literally overnight by new free features continuously being deployed by those who own the foundational models.

The other threat at play is the users themselves. As agentic UIs become even more simple, models become smarter, and cross-platform integrations become infinite, any user will be able to replicate any AI product that offers to make workflows easier, writing emails easier, data digestible, researching faster, talking to users faster, etc.

However, there's a different opportunity for VC firms.

The AI-native company: Those born out of AI that aren't actually AI companies.

These can be any company without a ".ai" domain. Old/new industries, boring/flashy companies. Doesn't matter.

These companies will not have technology as their moat (as VCs want to see).

Their competitive advantage will be hyper efficiency.

These companies will:

• Run 90% leaner
• Ship faster, navigate changes faster
• Cut costs incredibly

Ultimately, their moat will be pricing.

Incumbent competitors wont be able (or willing) to slash costs, teams, workflows, and partnerships to compete.

They'll lose on price. They'll lose on margin. They'll lose on speed.

This isn't a 'winner-take-all' play, but there's a helluva lot to go around to breed a new foal of non-AI company unicorns.

So if you're a VC firm outside of the tops ones, stop trying to pick the next unicorn AI startup.

Start looking for the next AI-native company that's 10x cheaper, 10x faster, and 10x leaner where their prices are unbeatable.