Investing in Artificial Intelligence: Key Trends for Funds

Methodology: A Fund-Focused View on AI Investment Dynamics

This article draws from market reports, fund manager insights, and AI ecosystem analyses to outline the main trends shaping how venture, growth, and corporate funds are investing in artificial intelligence today. We look at deal activity, sector focus, and strategic themes guiding capital allocation.

In Brief: What Funds Need to Know

• AI deal volume remains strong, with funds focusing on core infrastructure, applied AI, and ethical frameworks.

• Large funds and corporate VCs are increasingly backing AI tools that reshape entire industries.

• Geopolitics, regulation, and responsible AI principles are playing a bigger role in diligence.

• The next wave of winners may emerge from vertical AI not general-purpose models.

AI Investment Is Maturing But the Opportunity Remains Huge

Over the past decade, funds have steadily increased their exposure to artificial intelligence. From early bets on core machine learning platforms to today’s more refined focus on vertical applications (healthcare AI, legal tech AI, climate AI), the landscape has evolved.

AI deal activity remains resilient even in cautious markets, as funds seek companies offering real, scalable applications rather than AI hype.

According to PitchBook, AI and machine learning startups captured over $50 billion in venture funding globally in 2024, with enterprise AI infrastructure and applied AI solutions leading the way.

Key Trend 1: From General AI to Vertical AI

• Fund managers are shifting attention from general-purpose AI tools to sector-specific solutions. Why?

• Vertical AI startups typically show faster paths to product-market fit.

• Customers value AI embedded in their existing workflows (e.g., legal document review, clinical trial analysis).

• Regulatory clarity is stronger in narrow-use cases.

Funds investing in AI are looking for companies that deeply understand their end markets, not just ones building horizontal tools.

Key Trend 2: Responsible AI Moves Front and Center

Ethical AI isn’t just a discussion point anymore, it's a diligence priority.

LPs increasingly expect funds to assess AI safety, bias mitigation, and explainability during investment screening. Startups offering transparency features (e.g., model audits, bias dashboards) are gaining an edge in fundraising.

Funds that position themselves as champions of responsible AI will not only de-risk portfolios but also build brand credibility with partners and regulators.

Key Trend 3: Corporate Venture Capital Is Leading in AI Scaling

Corporate funds are playing a growing role in AI funding rounds especially at the growth stage. Why?

• AI solutions often require integration with large enterprise systems.

• Corporate VCs provide go-to-market pathways AI startups need to scale.

• Strategic investors are focused on AI that directly augments their core business lines.

We see funds co-investing alongside corporates in areas like AI-driven cybersecurity, supply chain optimization, and predictive analytics.

Final Thought: What’s Next for AI-Focused Funds?

The AI gold rush is shifting from model-building to real-world deployment. Funds that succeed will:

• Back founders solving specific industry problems.

• Prioritize responsible, explainable AI.

• Align with partners who can accelerate adoption at scale.

For investors, artificial intelligence isn’t just a theme, it's becoming an essential part of any modern portfolio.

Why Do Venture Studios Attract Investors?

Methodology: Understanding Investor Interest Through Models, Outcomes, and Market Signals

This article is based on an analysis of venture studio performance data, institutional investor trends, and commentary from founders and fund managers across Europe and the U.S. It examines why LPs and corporate partners are increasingly backing the venture studio model, and how it aligns with capital-efficient innovation and risk mitigation.

In Brief: What’s Driving Interest?

• Venture studios reduce startup risk through internal ideation, shared operations, and early product-market fit support.

• Investors are drawn to the repeatable nature of the studio model and its portfolio optionality.

• Studios often deliver higher ownership stakes, clearer paths to scale, and shorter time to value realization.

• The model aligns well with corporate innovation strategies and emerging markets.

• Studio economics are evolving to appeal to both traditional LPs and hybrid backers.

The Studio Model Offers a More Controlled Startup Building Process

Unlike traditional VCs that back external founders, venture studios originate and launch companies in-house, providing founding teams, initial capital, and operational resources. From day one, the studio has owned a significant equity position and maintains strategic oversight.

For investors, this structure reduces early-stage chaos. Ideas are pressure-tested before teams are formed. Hiring, product development, and GTM are handled with experienced operators.

This disciplined approach to entrepreneurship improves the odds of success and makes capital deployment more predictable.

Portfolio Construction: More Shots on Goal, Less Waste

Venture studios are built for portfolio logic. Instead of betting big on a single founder or product, they launch multiple companies in parallel, iterate fast, and shut down underperformers early.

For investors, this reduces downside risk. Studios can reallocate capital, reuse talent, and recycle insights across ventures. A single studio may create 10–20 startups over a few years, all from a shared knowledge base and infrastructure.

This portfolio optionality is appealing to LPs looking for high upside with downside protection.

Ownership and Exit Potential Are More Attractive

Because studios are co-founders, they often retain 25–50% equity stakes in their startups at launch, significantly higher than typical VC-backed models.

This concentrated ownership means that when a studio-backed company succeeds, the returns are larger and more direct. For investors in the studio itself, this structure translates into more meaningful exit participation per win.

Moreover, studios often guide startups to exit-readiness faster. With shared legal, hiring, and product resources, time-to-Series A (and beyond) is compressed.

Alignment with Corporate and Institutional Capital

Studios are also uniquely suited for corporate venture partnerships and family office co-building.

Corporates like the model because it offers them a front-row seat to innovation without the risk of internal R&D. For family offices, studios provide a way to co-create meaningful, values-aligned businesses without needing to incubate from scratch.

The model’s transparency, governance, and strategy-first approach make it easier to manage risk while fostering long-term engagement.

Studios Are Building in Emerging and Underserved Markets

Studios are increasingly being used to catalyze innovation in emerging markets, where capital is scarce but talent is abundant.

By controlling startup formation centrally, studios reduce the operational risk of building in fragmented or early ecosystems. They also attract LPs interested in impact investing, climate solutions, and regional development without sacrificing returns.

This makes the model a compelling vehicle for mission-aligned funds, development finance, and global innovation networks.

Final Thought: Studios Offer a New Kind of Investor Alignment

The rise of venture studios isn’t just about better startup outcomes. It’s about better alignment between capital, creators, and customers.

Studios combine the creativity of entrepreneurship with the structure of private equity. For investors, this means fewer surprises, more visibility, and a clearer path from idea to exit.

As more LPs rethink how they allocate to early-stage innovation, the venture studio model will continue to gain traction not as a trend, but as a tool for sustainable, scalable company building.

Liquidity Along the Path to Exits: Smart Moves for Founders and Investors

Understanding Liquidity Before the Exit

For years, liquidity in startups meant one thing: wait for the big exit. Whether through an IPO or an acquisition, that was the long game for everyone involved: founders, employees, and investors alike. But today’s startup landscape is different. Companies are staying private longer. Funding cycles have expanded. And liquidity, once a distant milestone, is becoming a necessary tool along the way. In this post, we will explore how liquidity works before the exit, the options available to founders and early stakeholders, and what you need to consider if you're building or investing in a company with a long road to a traditional exit.

Why Liquidity Matters More Than Ever

Startups are maturing differently now. Ten years ago, companies like Facebook went public in under a decade. Today, many high-growth businesses operate privately for 10, even 15 years. That long timeline can make it difficult for early employees and investors to access any return on their equity, often their most valuable asset. 

Pre-exit liquidity. It's become a lifeline for founders and team members looking to fund new ventures, pay taxes on stock options, or simply achieve personal financial goals. For investors, it’s a way to de-risk a long-term position without abandoning support for the company.

The Rise of Secondary Transactions

One of the most common ways to unlock liquidity is through secondary sales, when existing shareholders sell their shares to new investors.

Secondary sales don’t generate capital for the company, but they do serve a vital purpose: allowing founders, employees, and early backers to realize value without forcing a company into an early exit.

Platforms like CartaX, Forge, and EquityZen have made this easier by streamlining transactions and verifying pricing. Secondary markets are now playing a bigger role in the startup economy, especially in later-stage companies where demand from outside investors remains high.

Equity-Backed Loans: Borrowing Without Selling

Another liquidity option gaining traction is loans backed by startup equity. In this model, individuals use their shares as collateral to access cash, often without selling a single share.

Here’s how it works:

• A founder or early employee borrows from a lender based on the current valuation of their equity.

• The loan typically carries interest and is structured to be repaid at the time of an eventual exit or liquidity event.

• Some companies even offer internal lending programs as a benefit to key team members.

While this option avoids dilution and keeps cap tables intact, it does carry risks, especially if the company’s valuation drops or an exit is delayed. Still, for those confident in the future of their startup, it’s a compelling way to stay invested and financially flexible.

Private Equity as a New Liquidity Channel

Traditionally, private equity firms entered the picture much later, usually post-exit. But today, many PE firms are acquiring minority stakes in growth-stage startups, offering direct liquidity to founders and early investors.

This approach has become especially appealing in tech. Firms like KKR, General Atlantic, and Insight Partners are investing in companies that may not go public for years but have strong fundamentals and clear revenue models. These investments give the startup fuel to grow, while giving shareholders a chance to take some chips off the table.

Best Practices for Startup Liquidity

If you're considering liquidity for yourself or your team, here are a few best practices to keep in mind:

1. Get Clear on the Company’s Position: Liquidity should support growth, not signal weakness. Ensure the company is in a strong financial and strategic position before exploring options.

2. Protect the Cap Table: Too many secondary sales or poorly timed loans can impact the cap table and scare off future investors. Maintain transparency and cap table hygiene.

3. Understand the Tax Implications: Secondary sales and equity-backed loans can have complex tax consequences. Involve a tax advisor early in the process.

4. Communicate with Stakeholders: Be transparent with your board, co-founders, and team. Liquidity decisions affect everyone, not just the seller.

Final Thoughts: Liquidity Is Now Part of the Growth Journey

Liquidity is no longer a one-time event at the end of a company’s story—it’s now a thoughtful part of the journey. Founders don’t need to wait a decade to see the value they’ve built. Employees shouldn’t have to walk away from great companies just to pay down loans or fund life goals.

As long as it’s managed with care, liquidity can strengthen startups, fuel new ventures, and keep everyone motivated along the way.