Khosla Ventures among VCs experimenting with AI-infused roll-ups of mature companies

Venture capitalists are shifting their investment strategies by acquiring mature businesses and optimizing them with artificial intelligence, rather than solely funding startups. This approach, similar to private equity roll-ups, is being adopted by firms like General Catalyst, Thrive Capital, and Elad Gil. General Catalyst has already invested in seven companies, including Long Lake, which focuses on streamlining homeowners association management. This strategy provides AI startups with instant access to established clients, addressing challenges such as long sales cycles and customer acquisition difficulties.

Khosla Ventures is cautiously exploring this investment model, with plans to assess its potential for strong returns before committing further. General partner Samir Kaul emphasized the importance of maintaining the firm's strong return track record while managing other people's money. If successful, Khosla Ventures may partner with a private equity-style firm for acquisitions, as they lack the expertise to do it alone. The firm aims to evaluate a few deals before potentially raising funds specifically for this strategy.

Key takeaways:

Some venture capitalists are shifting their investment strategy from funding startups to acquiring mature businesses and optimizing them with AI.
Firms like General Catalyst and Thrive Capital are leading this trend, with General Catalyst already backing seven companies using this approach.
Khosla Ventures is cautiously exploring this strategy, considering it a potential way to provide AI startups with access to established clients.
Khosla Ventures plans to partner with a PE-style firm for acquisitions if the initial investments prove successful, rather than building an in-house team.

Khosla Ventures among VCs experimenting with AI-infused roll-ups of mature companies | TechCrunch

Key takeaways:

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