{"id":157981,"date":"2025-11-28T12:34:08","date_gmt":"2025-11-28T12:34:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/157981\/"},"modified":"2025-11-28T12:34:08","modified_gmt":"2025-11-28T12:34:08","slug":"ai-boom-will-create-giants-and-topple-overhyped-startups-vc-investor","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/157981\/","title":{"rendered":"AI Boom Will Create Giants, and Topple Overhyped Startups: VC Investor"},"content":{"rendered":"

The AI boom<\/a> is only just beginning \u2014 and it may prove the most lucrative cycle in venture-capital history, even as it also leaves behind a wave of startups.<\/p>\n

That’s according to Mel Williams, cofounder and partner at TrueBridge Capital Partners, a fund-of-funds manager with $8 billion under management that has backed firms such as Founders Fund, Thrive, and Sequoia.<\/p>\n

While VCs pick startups, Williams’ job is to pick the VCs \u2014 giving him a rare, ecosystem-wide view of what’s coming.<\/p>\n

His outlook: AI will create enormous value<\/a> over the next decade, but a number of startups won’t make it out alive.<\/p>\n

“We think we’re at the leading stages of an AI wave,” Williams said during an interview on Jack Altman’s “Uncapped” podcast released on Tuesday.<\/p>\n

“We’re going to see a lot of carnage over the next 10 years. And we will see more value created over the next 10 years than we’ve seen in the venture industry,” he said.<\/p>\n

A ‘frothy’ market \u2014 especially at the earliest stages<\/p>\n

Williams described the early-stage AI environment as overheated.<\/p>\n

Founders with the right r\u00e9sum\u00e9s \u2014 often with experience at OpenAI or top labs \u2014 can raise massive rounds at lofty valuations with little proof their product works.<\/p>\n

“At the earlier stages of the formation stages, where there’s less evidence of a product market fit, you do see founders with credibility, founders who could check a couple boxes raising large pools of capital at very high valuations,” he said.<\/p>\n

Growth-stage deals, he added, look more reasonable, with valuations closer to public-market levels as investors focus more on real revenue.<\/p>\n

AI will amplify the venture’s power-law dynamics<\/p>\n

Williams believes AI is accelerating the power-law pattern that already defines venture capital: a tiny handful of companies drive nearly all the returns.<\/p>\n

“The magnitude of the winners is even greater today than it has been in prior cycles,” he said. It “is going to be outsized in this market.”<\/p>\n

He pointed to three forces intensifying that trend:<\/p>\n

AI software scales instantly, with near-zero marginal cost.Enterprises are aggressively adopting AI tools, with explicit budgets allocated for them.Consumers jump in immediately, as seen with ChatGPT’s explosive growth.<\/p>\n

The result: companies that get product-market fit could become market leaders quickly, while those that miss may stumble. <\/p>\n

Outside AI, the venture market looks surprisingly healthy \u2014 but the fallout will still be brutal<\/p>\n

Williams said the frenzy is largely confined to the field of AI. Outside of this, valuations remain reasonable, and capital still moves around milestones and revenue, he said.<\/p>\n

The broader venture market, in his view, looks attractive compared to the overheated AI landscape.<\/p>\n

But AI now accounts for 50% to 60% of all venture activity, he said \u2014 and that imbalance is setting the stage for a harsh correction.<\/p>\n

Even if non-AI categories stay rational, Williams believes the sheer amount of capital flooding into AI will create a long trail of “carnage” as companies miss product-market fit or fail to justify their sky-high valuations.<\/p>\n

“We’re in the early stages of that. There’s evidence that it’s working,” he said, but he added, “at the same time, it feels like a very frothy investment environment.”<\/p>\n","protected":false},"excerpt":{"rendered":"The AI boom is only just beginning \u2014 and it may prove the most lucrative cycle in venture-capital…\n","protected":false},"author":2,"featured_media":157982,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[365,33795,363,364,1288,65779,1656,311,104406,104408,4462,104404,111,139,69,89827,104407,5433,1037,145,104405,24358],"class_list":{"0":"post-157981","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-ai-boom","10":"tag-artificial-intelligence","11":"tag-artificialintelligence","12":"tag-capital","13":"tag-carnage","14":"tag-company","15":"tag-founder","16":"tag-high-valuation","17":"tag-lofty-valuation","18":"tag-lot","19":"tag-mel-williams","20":"tag-new-zealand","21":"tag-newzealand","22":"tag-nz","23":"tag-product-market-fit","24":"tag-real-revenue","25":"tag-stage","26":"tag-startup","27":"tag-technology","28":"tag-vc-investor","29":"tag-wave"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/157981","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=157981"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/157981\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/157982"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=157981"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=157981"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=157981"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}