The AI revolution is upon us, bringing with it the potential to disrupt the startup landscape and investing ecosystem in ways we’ve never seen before. As the world grapples with the uncertainties ahead for investors and founders, it’s essential to recognize that AI will transform the form and approach of startups, much like the “lean” methodology did 15 years ago, but it doesn’t eliminate startups or the essential role of early stage angel investors.
As AI makes software-based startups increasingly trivial and cost-effective, we must ask ourselves: what type of startup, not primarily driven by code but potentially improved or disrupted by AI, might emerge? This is the space to watch as the traditional code-based startup business model evolves, and perhaps matures, and becomes less impactful or attractive for angels.
We may see the rise of a new class of startup organizations.
Recall that Steve Blank characterized startups as temporary organizations searching for a business model. Imagine a startups as only those temporary organizations creating a new business model, that emerge and quickly connect and integrated into other existing and emerging models rather than go alone for years to some exit event. Startups as Lego blocks.
Perhaps there is a new class of startups staffed predominantly by AI, similar to how hardware robots have transformed manufacturing plants. While initially feared, robots didn’t eliminate the need for human roles; they merely changed and elevated them within organizations. The same transformation could happen once again, especially in areas of high value to the angels holding the checkbook.
Some sectors ripe for exploration include:
- Health tech (wellness, acute care, remote care)
- Energy (intelligent energy management and carbon management)
- Housing (affordable, multiuse, financing)
- Food systems (response to energy, localization, waste)
- Open innovation linking startups with existing organizations
- Senior Tech, retirement living, and assisted living
- EV and Autonomous vehicles
Are you still worried about AI disrupting software companies?
Angels, as investors and startup ecosystem builders, sould focus on how we invest and incentivize investment to improve human lives and create a better world for the next generation. This effort should be on par with the progress made in enhancing machines and technology.
AI is indeed impressive, but let’s not lose sight of its potential to build better businesses that help humans live vibrant, secure, and healthier lives. As angel investors, this is the perfect opportunity to make a significant impact. Angel investors are essential independent agents in the ecosystem not bound by institutional constraints, controlling early-stage resources for startups. This makes them instrumental in shaping the future of the startup landscape.
It’s an exciting time to be an angel investor as they play a pivotal role in ecosystem building. By embracing the disruptive nature of AI and harnessing its potential for good, directing early state resources, we can create a future where both technology and humanity flourish together.