Venture investors have always focused on investing in companies that take advantage of technology to disrupt the established industries or create a completely new business category.
But some VCS are starting to turn the script in their investment style. Instead of financing startups, they are receiving firm businesses – such as call centers, accounting firms, and other professional service firms.
This strategy, which is often attributed to private equity rollups, is being employed by such firms. General CatalistFor, for, for,. Fruitful capitalAnd solo vc Sell. General Catalist, presenting it as a new asset class, has supported seven such companies, including a startup, including Long Lake, which has launched a homeowner association in an attempt to further smooth communities. According to Pitch Bok data, after its formation less than two years ago, Long Lake has received $ 670 million.
Although the strategy is still new, some other venture organizations have told Tech Crunch that they are also considering trying the investment model.
They have Khosla Ventures, a firm that is known to make the initial stake on dangerous, unmanaged technologies with long development timelines.
“I think we will look at some of these occasions,” Sameer Cole, general partner of Khosla Ventures, told Tech Crunch.
Interestingly, this PE -flavorful approach can be a wonderful benefit to backing AI Startups VCS. If a VC marries old businesses with new technology, AI startups will essentially access to large, established clients, seeking service to these industries.
According to Coal, such access will be helpful when the new startup has difficulty making users secure. With the rapid change rate in AI, the number of startups starting in the market, and historically long -lasting sales cycle to sell to businesses, such difficulties apply to many AI startups.
But Khosla Ventures want to move forward carefully. Cole said, “The companies we are seeing are unlikely to waste money, but they do not want the firm’s strategy to ruin the firm’s strong return track record.” My biggest tension in life is that I am managing other people’s money, and I want to make sure that I will be a good stew. “
Although Khosla Ventures is launching “double” in the AI Roll -up investment, Coal explained that the firm wants to make some deals to assess whether a firm has been made a strong profit before raising money for a car with the purpose of this investment strategy.
If the initial bats expire, Khosla will likely contribute with a PE style firm to help a team rather than hiring a team. “We will not be alone, we do not have so much skill,” he said.