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In today's big story, we're looking at how AI could completely upend venture capitalism amid a wider shakeup for the industry.

What's on deck:

But first, how the tables have turned.

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The big story

AI comes for VCs

Foto: zentilia/Getty Images; Jenny Chang-Rodriguez/BI

Like turkeys setting the table for Thanksgiving dinner, VCs are backing tech that might lead to their demise.

The generative AI boom was a welcome change for a venture industry looking for a new trend to back (and hopefully profit from).

But the transformative technology could greatly impact the people bankrolling it. The result could be a reduction of roles and changes to how the job is done, writes Business Insider's Ben Bergman.

Some of the adjustments aren't novel to the VC industry. Back-office roles everywhere are ripe for automation from AI, and venture capital is no different.

But things get really interesting when it comes to actual investing. Finding and assessing new startups — often key responsibilities of junior employees — is the type of work large-language models could do more efficiently at a large scale.

VCs won't get entirely automated away by AI — after all, how could they still justify all those fees if they only relied on AI? But a human-AI hybrid approach seems like the future, according to some insiders Ben spoke to.

However, balancing between man and machine for investment decisions isn't easy. Just ask hedge funds.

Long before the generative AI boom, funds dreamed of combining the best of machine-based quantitative strategies and human-led fundamental approaches. The concept — known as "quantamental" — struggled to find success as the two cultures often clashed.

Now consider venture investing, where ultimately, a singular decision needs to be made: invest or don't. When push comes to shove, does man or machine reign supreme?

Scott Stanford, ACME Capital's cofounder, believes major changes are coming for the venture-capital industry. Foto: ACME Capital; Getty Images, Chelsea Jia Feng/BI

The VC industry might be doomed with or without AI.

Scott Stanford, a cofounder and partner at early-stage VC firm ACME Capital, told BI's Blake Dodge that half of today's VC firms will shutter in the next decade.

Stanford's theory is pretty simple: There are too many VCs and not enough exit opportunities. And this isn't a knee-jerk reaction to how chilly the IPO market has been the past few years.

VCs' explosive growth over the past few decades created an "overcrowded, overcapitalized, and overvalued market," Stanford and ACME's cofounder Hany Nada told investors in a recent letter shared with BI.

The writing is already on the wall. Look no further than the rise of "zombie" VCs, or investors running out of money.

But if anyone can fix things, maybe it's… VCs? After all, venture investors tout themselves as disruptors who pride themselves on finding and helping to grow solutions for big problems.

Now, VCs might have their toughest task yet: Saving themselves.

News Brief

Your Monday headline catchup

A quick recap of the top news from over the weekend:

3 things in markets

Foto: Jared Siskin/Getty Images for Madison Square Park Conservancy

  1. A top Jain Global executive explains how the firm will stand out on the eve of its massive launch. Bobby Jain's hedge fund launch has been the talk of Wall Street. Jonathan Barton, Jain Global's chief operating officer, spoke to BI about how the fund is built to quickly grow once it starts trading on July 1.
  2. The end of a US-Saudi deal could dent dollar dominance. Saudi Arabia chose not to renew the landmark "petrodollar" deal that ensured the use of US dollars in the oil trade. That's bad news for the dollar's supremacy. The move is part of the kingdom's grand plan to diversify trade and expand beyond US and European partners.
  3. There is a light at the end of the interest-rate tunnel. A July rate cut, while still a longshot, could be on the table, according to one economist. Jobless claims and housing data show an economic slowdown, which could lead the Fed to finally offer some relief next month.

3 things in tech

Foto: iStock; Rebecca Zisser/BI

  1. Chinese EV makers are slowly taking over the world. Despite efforts from the US and Europe to shut them out, Chinese EV firms are expanding rapidly in developing markets like Brazil and Southeast Asia. This poses a major problem for legacy automakers like Ford, who risk being left behind.
  2. OpenAI's GPT Store developers are finding new ways to get paid. OpenAI has yet to widely roll out plans to pay developers making applications for its GPT Store — so some are getting creative. They're turning to ads, affiliate links, and "freemium" models to get paid.
  3. Apple accused of breaching EU rules. The European Commission has accused Apple of stifling competition with its App Store. Regulators said the company breached new tech rules by preventing app developers from steering customers to alternatives.

3 things in business

Foto: Elif Ozturk/Anadolu Agency via Getty Images; Chelsea Jia Feng/BI

  1. Jeff Bezos' plan to revamp The Washington Post is imploding. Incoming newsroom editor Robert Winnett pulled out of the job Friday morning after a slew of revelations about his past as a writer in London. Meanwhile, Will Lewis, the Washington Post's publisher, has also come under fire. That's bad news for Bezos, who needed the two men to breathe new life into the newsroom.
  2. The American dream of home ownership is becoming an American fantasy. A recent Harvard study found monthly payments for a median-priced home after taxes and insurance have hit about $3,100. That's the highest level it's been in more than three decades. That payment requires a household income of at least $120,000 a year, which only 6% of renters have.
  3. The silver lining of sports betting scandals. The series of high-profile gambling scandals that recently rocked the sports world thrust the long-overlooked issue into the spotlight. Leagues are now focusing on educating athletes who may be betting-prone, and the industry's gotten a lot better at catching bad actors.

In other news

What's happening today

  • Paris Fashion Week begins.

The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London. Annie Smith, associate producer, in London. Grace Lett, associate editor, in Chicago. Amanda Yen, fellow, in New York.

Read the original article on Business Insider