How AI may disrupt venture capital, from making it easier and cheaper to start software companies, to agentic investors analyzing startup pitch decks and teams
Context & Ripple Effects
Venture firms have been applying AI to investment decisions for years, from algorithm-assisted investment decisions to AI-supported searches for startups and acquisition targets. This story extends that arc from analytical assistance toward agents that could participate more directly in early screening.
The shift arrives as AI startups absorbed 53% of global VC dollars in H1 2025, while major firms were already assessing portfolio companies’ exposure to AI disruption. It matters because AI is affecting both the supply of new software companies and the process used to select them.
First-order effects
- AI tools could reduce the cost and effort required to build an initial software product, allowing more prospective founders to reach the point of seeking venture funding.
- Agentic systems could take on first-pass review of pitch decks and founding teams, changing the workflow for investors that adopt them.
Second-order effects
- A larger pool of fundable companies and cheaper initial screening could increase deal flow, forcing VC firms to distinguish themselves through judgment, founder relationships, and post-investment support rather than sourcing alone.
- If automated screening becomes common, startups may increasingly optimize how their materials and signals are legible to investor systems, while investors must validate machine-generated assessments before acting on them.
Third-order effects
- Venture underwriting could become a hybrid process: software standardizes early filtering, while human investors concentrate on conviction, unusual opportunities, and decisions where team quality cannot be cleanly inferred from available data.
- Lower formation costs do not necessarily lower competition for capital; if AI continues to attract an outsized share of funding, the market may pair more startup creation with greater pressure to prove durable differentiation.
The trend: AI is reshaping venture capital simultaneously as a startup-production tool and as an underwriting layer for the firms financing those startups.