I’m convinced that a shift is coming. AI will usher in an era where hardware will be attractive to mainstream VC. Code generating AI already helps developers write code, test it, and generally increase efficiency. As these AI helpers become more robust and usage becomes more widespread, the impact on the VC investment landscape will be significant. More specifically, I think the rotation out of software into hardware will be one of the dominant trends over the next five years. I break this down in five slides.
A quick recommendation on how to read this post. I wrote it to be consumed on three levels, so I think the best way is to take three passes over it:
first pass: just read the bold level-one section headers (they give the broad sweep of the argument)
second pass: read the individual level-two slide headers (they are basic support statements for each section header)
third pass: read the more detailed level-three discussion in gray boxes (they unpack the basic support statements)
Tech moat and time-to-market are constraints on investability.
Software has been an ideal investment given these constraints.
However, AI is collapsing time-to-market. This is good for hardware, but bad for software.
There are two categories of AI powered hardware that will emerge as winners from this paradigm shift.
The factors driving this shift will accelerate as the positive feedback loop between investment, talent, and outcomes plays out.
These are just my thoughts. Feel free to challenge, agree/disagree, or just say hi in the comments. I’ll reply as I can.
About me
I’m an investor in AI, robotics and mediatech. If you’re building in these spaces, let’s talk. My posts reflect my views alone and do not represent any company or entity. This is not investment advice.