Venture capitalists are investing billions into artificial intelligence, betting that AI will fundamentally transform almost every industry. From software development to healthcare, finance and manufacturing, few sectors are expected to remain untouched. But there’s an uncomfortable question the venture capital industry should be asking itself: Why would our own business be any different?

The discussion usually revolves around whether AI will eventually become better than humans at identifying promising startups and making investment decisions. That’s certainly an interesting question. But I believe there’s an even bigger disruption ahead: What if AI doesn’t just change how venture capitalists work, but fundamentally reduces the need for venture capital itself?

AI Is Already Transforming the VC Job

A significant portion of what venture capitalists do every day involves analysing information. We review pitch decks, research markets, evaluate competitors, build financial models, examine regulatory risks and write investment memos. Much of this work is time-consuming, repetitive and increasingly well suited for artificial intelligence.

AI can already perform many of these tasks at a remarkably high level. What previously required several days of research can now often be accomplished in a fraction of the time. AI agents can independently analyse different aspects of a business, challenge assumptions and identify risks that a human analyst might overlook. And unlike humans, they don’t get tired after reviewing their seventh cybersecurity startup of the week.

This will fundamentally change the traditional career path in venture capital. Many responsibilities that historically belonged to junior analysts and associates will become automated or significantly accelerated. The question is no longer whether AI will become part of the investment process. It already is. The real question is how much human involvement will still be necessary.

Investing in Startups Is Not Just About Data

However, there’s an important distinction between analysing established companies and investing at the earliest stages. When evaluating a business generating $50 million in annual revenue, investors have plenty of information to work with. Customer retention, growth rates, margins, acquisition costs and market dynamics provide measurable signals. Given sufficient high-quality data, AI could eventually become better than most humans at interpreting these patterns.

Early-stage investing is a completely different challenge. Imagine two founders sitting in front of you with a pitch deck, no meaningful revenue and perhaps not even a finished product. You’re supposed to determine whether these individuals have the potential to build a multibillion-dollar company over the next decade. There are almost no reliable metrics, historical data is of limited relevance and the market they want to address might not even exist yet.

It’s a bit like trying to identify the next Michael Jordan while he’s still in kindergarten.

This is where human judgement, intuition, experience and the ability to understand exceptional individuals remain important. But we should also be careful not to romanticise these capabilities. Venture capitalists are notoriously imperfect at predicting success. Most investments never become extraordinary outcomes, and many fail entirely. AI doesn’t need to become a perfect investor. It simply needs to become better at making these decisions than we are.

The Bigger Threat: What If Startups Need Less Capital?

While the debate about AI replacing investors is fascinating, I believe the more consequential change might happen on the other side of the table.

For decades, the venture capital model has been built around a relatively simple assumption: Building and scaling a technology company requires substantial amounts of capital. Startups raise a seed round to hire engineers and launch a product. They raise a Series A to expand the team and acquire customers, followed by additional rounds to accelerate growth. Each stage typically requires more employees, infrastructure and funding.

Artificial intelligence is beginning to challenge this equation.

A small team equipped with powerful AI tools can increasingly accomplish work that previously required an entire engineering department. Software development, design, customer support, marketing and operational tasks are becoming dramatically more efficient. It’s conceivable that a startup that previously needed several million dollars to reach product-market fit might eventually achieve similar progress with a fraction of that capital.

For founders, this is an extraordinary opportunity. They can build faster, maintain greater ownership, avoid unnecessary dilution and potentially reach profitability without going through multiple fundraising rounds. For venture capitalists, however, the implications are much less comfortable.

What happens to an industry built around providing capital when its most attractive customers increasingly don’t need that capital?

We could eventually find ourselves in a situation where enormous amounts of venture capital compete for a shrinking number of startups that genuinely require large investments.

Venture Capital Will Survive, but It May Look Very Different

Of course, not every industry can be transformed by a small team and a collection of AI agents. Training frontier AI models requires enormous computing resources. Robotics companies need hardware, manufacturing capabilities and physical infrastructure. Biotechnology involves laboratories, clinical trials and long development cycles. Semiconductors and energy technologies remain inherently capital-intensive.

These industries will continue to depend on substantial external financing, and venture capital can play a critical role in enabling technological breakthroughs that would otherwise be impossible.

But for traditional software businesses, the economics could shift dramatically. The next generation of successful SaaS companies might operate with significantly smaller teams, generate more revenue per employee and require considerably less external funding.

This doesn’t necessarily mean venture capital disappears. But it could mean fewer funds, a stronger focus on capital-intensive innovation and a much more competitive environment for investors.

What Will Make a Great VC in an AI-Driven World?

If AI can automate much of the analytical work and founders increasingly require less capital, what competitive advantage remains for venture capitalists?

I believe three things will become particularly important: access, judgement and genuine value creation.

Access means building relationships with exceptional entrepreneurs before they become obvious investment opportunities. The best founders won’t necessarily share their opportunities with every investor or upload their pitch decks to an automated investment platform. Trust, reputation and networks will continue to matter.

Judgement means recognising extraordinary individuals and emerging markets when the available data tells only part of the story. And value creation means actually helping founders build better businesses through customer introductions, recruitment, strategic guidance, future fundraising and support during difficult moments.

Ultimately, an investor who offers little more than money and a sophisticated analysis will find it increasingly difficult to differentiate. An investor who brings meaningful relationships, experience and hands-on support can still provide substantial value.

The Real Question Isn’t Whether AI Can Replace VCs

AI will undoubtedly change venture capital. It will automate research, accelerate due diligence, challenge investment decisions and make many traditional workflows obsolete. At the same time, it could enable entrepreneurs to build extraordinary businesses with fewer people and significantly less funding.

And that second development might ultimately be far more disruptive than the first.

The venture capital industry has spent years financing technologies designed to make businesses more efficient. Now those same technologies may force the industry to rethink its own economics and value proposition.

Perhaps the most important question isn’t whether AI will become a better venture capitalist. It’s whether the next generation of great entrepreneurs will need venture capitalists at all.