PitchBook News - Will an AI be your next VC?

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The Weekend Pitch

December 24, 2023

The Weekend Pitch is powered by PitchBook’s industry-defining research and best-in-class data

(Drew Sanders/PitchBook News)

Venture capitalists have poured billions of dollars into generative AI this year in the hopes that it will disrupt … well, everything. But the industry itself isn't immune to that same type of disruption.

Earlier this month, a new AI tool was announced specifically for the venture capital industry: Decile Base. The product, launched by VC Lab, acts as a knowledge base to give immediate responses to complex questions related to VC operations—a ChatGPT for investors. It covers topics ranging from fundraising and management fees to valuations and due diligence.

The advantages of using AI for some functions critical to VCs are clear. Large language models are particularly good at sifting through and categorizing mountains of data and can do so at much greater speed than humans. Streamlining deal sourcing and due diligence can free up time for investors to spend with portfolio companies, and AI data analysis can help identify new trends to investments.

Widespread use of AI has the potential to democratize the VC industry by giving smaller firms and new entrants sourcing abilities that can compete with the giants, and by reducing operational burdens.

While this sounds like a win for the VC industry, there is an important question to ask. If VCs are hoping that generative AI will replace the need for humans for a multitude of tasks, how long will it be until they themselves are displaced?

This is the Weekend Pitch, and I'm Leah Hodgson. You can reach me at leah.hodgson@pitchbook.com or on X @LeahFHodgson.

Trivia

Accel, a prolific VC investor based in the Bay Area and early backer of startups like Slack, Etsy and Bumble, just closed its 16th flagship fund, PitchBook recently reported. How much did the firm raise?

A) $100 million
B) $650 million
C) $467 million
D) $899 million

Find your answer at the bottom of The Weekend Pitch!

6 PE market forecasts for 2024

(Adam Gault/Getty Images)

Not even our analysts have a crystal ball to tell them exactly what the future holds. But during a time of uncertainty, their data-powered forecasts of PE market trends can provide valuable insights.

In our 2024 US Private Equity Outlook, PitchBook analysts tell us to watch for a greater prevalence of continuation funds, a slower fundraising pace and prolonged holding periods of PE assets. And they flag one industry likely to outperform due to resilient fundamentals.

Peak unicorn lies just ahead

(Pone Pluck/Getty Images)

A massive reset in startup valuations wasn't enough to rein in billion-dollar startups in 2023. Defying expectations, the number of unicorns grew, albeit slowly—thanks in no small part to generative AI.

Many unicorns are expected to run out of cash in 2024, and they may be forced to compromise on their valuations in the process. Others will go public at long last. Both of these trends will contribute to a decline in active US unicorns and their collective valuations, our 2024 US Venture Capital Outlook predicts.

Our analysts' top predictions for European PE and VC

(kirill_makarov/Shutterstock)

While there are hopes that 2024 may bring greater economic stability, immediate changes in European private equity and venture capital dealmaking and fundraising seem unlikely.

In our 2024 European Private Capital Outlook, PitchBook analysts give their top six predictions. These include how PE fundraising is expected to become even more concentrated, why PE mega-deals are likely to remain muted and how VC fundraising may begin a modest recovery.

Quote/Unquote

(Andriy Onufriyenko/Getty Images)

"There are some who think hydrogen is a panacea. I disagree."

—Victoria Beasley, general partner at impact climate firm Gigascale Capital, talking to PitchBook News about tepid VC interest in hydrogen fuel startups.

Stay tuned

Check out these insights and reports recently released:

Trivia

Answer: B)

Accel raised $650 million for its 16th flagship fund. You can read more about Accel, the fund and how it stacks up against other funds in this PitchBook story.

This edition of The Weekend Pitch was written by Leah Hodgson, Jacob Robbins, Madeline Shi, James Thorne and Marie Kemplay. It was edited by Andrew Woodman and Ron Prichard.

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PitchBook News - Will an AI be your next VC?

Trivia

6 PE market forecasts for 2024

Peak unicorn lies just ahead

Our analysts' top predictions for European PE and VC

Quote/Unquote

Stay tuned

Trivia

Older messages

What we expect in 2024

Visions for enterprise, consumer tech in 2024

Many VCs have stopped writing checks

Emerging industrial tech's outlook for 2024

Analysts make VC 2024 predictions

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