Khosla Ventures among VCs experimenting with AI-infused roll-ups of mature companies
Volal capitalists have always focused on investing in companies that use technology to disrupt established industries or to create completely new business categories.
But some VCs start to turn the script on their investment styles. Instead of financing startups, they acquire adult companies – such as call centers, accountancy firms and other professional service companies – and to optimize them with artificial intelligence to serve more customers through automation.
This strategy, often compared to private equity roll-ups, is used by companies such as General catalyst“ Thray capitaland Solo VC Elad Gil. General Catalyst, who promotes this as a new activa class, has already supported seven such companies, including Long Lake, a startup that collects associations of homeowners in an attempt to make communities more streamlined. Since its foundation less than two years ago, Long Lake has provided $ 670 million in financing according to PitchBook.
Although the strategy is still new, a few other venture outfits techcrunch have told that they are also considering trying out the investment model.
Among them is Khosla Ventures, a company that is known for making early bets on risky, unproven technologies with long development time lines.
“I think we will look at a few of these kinds of opportunities,” Samir Kaul, general partner at Khosla Ventures, told WAN.
Interestingly, this PE-Gearomatized Approach can be a surprising advantage for the crowds of AI startups that support VCs. If a VC old companies marries new technology, AI startups who want to serve these industries would essentially have immediate access to large, established customers.
According to Kaul, such access would be useful if new startups have difficulty protecting customers themselves. With the rapid change in AI, the number of startups that flows on the market and the historically long sales cycles involved in the sale to companies, such difficulties apply to many AI startups.
But Khosla Ventures wants to be careful. “The companies we look at are very unlikely that they lose money,” said Kaul, but he doesn’t want the strategy to ruin the strong track record of the company. “My biggest stress in life is that I manage the money from other people, and I want to make sure that I stay a good steward.”
While Khosla Ventures is starting to ‘float’ in AI Roll-up Investments, Kaul explained that the company wants to do a few deals to assess whether such investments yield a strong return for the company before they may raise money for a kind of vehicle that is specifically aimed at this investment strategy.
If early bets would come out, Khosla would probably collaborate with a PE-style company to help with acquisitions instead of hiring a team. “We wouldn’t do it alone, we don’t have that expertise,” he said.
