Risk capitalists have always focused on investing on companies that take advantage of technology to interrupt established industries or create completely new business categories.
But some VC are beginning to turn the script in their investment styles. Instead of financing new companies, they are acquiring mature businesses, such as call centers, accounting firms and other professional service companies, and optimizing them with artificial intelligence to serve more customers through automation.
This strategy, often compared to private capital enclosures, is being used by companies such as General catalyst, Prosperation capitaland only vc Elad Gil. General Catalyst, promoting this as a new class of assets, has already backed seven companies, including Long Lake, a startup that collects associations of owners in an effort to make communities management more rationalized. Since its foundation less than two years ago, Long Lake has obtained $ 670 million in funds, according to Pitchbook data.
While the strategy remains new, some other risk attire have told TechCrunch that they are also considering trying the investment model.
Among them is Khosla Ventures, a firm known for making early bets in risky and not tested technologies with long development deadlines.
“I think we will see some of these types of opportunities,” Samir Kaul, a general partner of Khosla Ventures, told Techcrunch.
Interestingly, this PE flavor approach could be a surprising benefit for the crowds of the new AI companies are supporting. If a VC marries old companies with new technology, the new AI companies that wish to serve these industries would essentially get instant access to large established customers.
According to Kaul, this access would be useful when new new companies have difficulty assuring customers on their own. With the rapid exchange rate in AI, the number of new companies that are carried out in the market and historically long sales cycles involved in the sale of companies, such difficulties apply to many new AI companies.
But Khosla Ventures wants to proceed with caution. “It is very unlikely that the companies we are seeing lose money,” said Kaul, but does not want the strategy to ruin the strong return history of the company. “My greatest stress in life is that I am handling other people’s money, and I want to make sure to remain a good administrator of it.”
While Khosla Ventures is beginning to “venture” into the rolled investments of AI, Kaul explained that the company wants to make some agreements to assess whether such investments offer strong yields for the company before possibly raising money for some type of vehicle specifically aimed at this investment strategy.
If early bets are produced, Khosla would probably be associated with a PE -style company to help you with acquisitions instead of hiring a team. “We wouldn’t do it alone, we don’t have that experience,” he said.