Where are investors placing their bets next year? AI, AI, AI.

Investors at TechCrunch Disrupt did not shy away from admitting they are interested in mainly one thing: artificial intelligence.  

Nina Achadjian from Index, Jerry Chen from Greylock and Peter Deng from Felicis, all spoke about the latest obsession in venture capital and how startups can stand out in a quickly crowding market. The environment is moving fast, Achadjian told the crowd, and companies are experiencing unprecedented growth.  

“We spend an enormous, enormous amount of time really assessing the entrepreneur and how resilient they will be able to be in a moment where things are just rapidly changing,” Achadjian said. Now more than ever, founders have to lean into showing their passion, domain expertise, and remain honest about their product market fit, she said.  

“There is so much demand from enterprise companies to try the latest and greatest AI, sometimes there’s false positives of product market fit,” she explained, “and you can get a lot of revenue with not having true ROI,” meaning customers who are getting their return on investment.  

That leads another consideration VCs are looking for: an ability to pivot as the market twists and turns. “There’s a joke that, like, 1000 startups die and that’s why being resilient is really important,” Achadjian continued.  

Deng, who used to work at OpenAI, added to Achadjian’s statements. He said founders need to find their unique data flywheels that are going to separate them from the hordes of everyone pitching the exact same idea, especially since the enterprise companies likely testing their products are also testing out a few other competitors at the same time. 

“If you’re able to go deep and really solve a true need for them,” in a way they cannot do themselves, then managing data is “where the important part is,” he said.  

Founders should also have an answer for why their product will not just be a feature added into the foundational models, Achadjian said. It may be okay if a founder doesn’t know if the model makers are working on a competor but they should have a hypothesis on how the business is defensible when pitching investors.  

Right now, what’s working in AI seems to be three things, Chen noted: Chat apps, coding apps, and AI in customer service. But there is still so much more change to happen throughout early every sector and industry.

Deng is excited by AI-enabled marketplaces. Achadjian, meanwhile, thinks that this could be the moment for robotics, while Chen is curious to see how AI impacts SaaS and othermarkets not yet directly impacted.

As for what’s not AI and exciting? “Pen and paper processes and digitize them,” Achadjian said. There’s a lot of blue-collar industries that, incredibly, still do many processes manually, she continued. But, they acknowledged even that is ripe for the opportunity to be automated by AI.