ChatGPT, a new artificial intelligence tool that achieved virality with its savvy messaging ability, has certainly struck a chord. The tool, made available to the general public just last month, is smart enough to answer serious and silly questions about profound topics, which has landed it in debates led by writers, educators, artists and more.
But for investors, ChatGPT’s surge isn’t just an inspiration for them to run and back the next big AI tool. Some are thinking through ways to integrate the technology into their workflows to do their jobs better, smarter and maybe even cheaper.
Many investors shrugged at the idea of artificial intelligence replacing the more monotonous parts of their work. After all, in a business driven by value-add and personality, who would want to admit that AI could do their job?
But stigma aside, venture has tried to automate itself for years, whether in deal discovery or even investment support. But ChatGPT being a specifically text-based support tool, automation could be making its way to rejection letters, market maps or even bits of due diligence — all in order to stay afloat in a changing venture landscape.
The use cases
Kate McAndrew, general partner at Baukunst, said she would be “shocked” if associates weren’t using ChatGPT given that the AI is a “natural evolution of snippets.” As for herself, she admits to not even using Google’s AI autocomplete, writing all of her emails from scratch. She said that method is slow, “but feels genuine in a way that is important to me.”
Some investors expressed that ChatGPT could be used for fact-checking purposes around market size claims or growth potential; at the same time, so could Google. The argument for AI, of course, would be that the content would be original and perhaps more targeted toward someone’s exact questions, while a general Google search may require extra digging and piecing different articles together.
Hustle Fund general partner Eric Bahn is a proponent of ChatGPT and used it to write his end-of-year essay for his investors last month. He shared the prompt he used and the output and said investors responded well to it.
Bahn hasn’t used it for pass responses, though it made sense to him that associates might.
“Most reasons for passing are pretty standard and fall into a discrete set of buckets as to why a VC is passing,” he added. “Creating some light permutations of the same answer via ChatGPT could save a lot of other time. So long as the feedback is actionable for the founders — and not a generic boilerplate — then I have no issues with this approach.”
Meanwhile, Jerry Lu, principal at Maveron, doesn’t know of any associates using the tactic and said that “founders are smart enough to read through a pass email, and if it’s ambiguous/generic, it doesn’t do any service for the company or the reputation of the VC firm.”
However, he did point out that he’s heard of associates at other firms having to send “pass” emails on behalf of partners but are given little info on the startup, so they might use something like ChatGPT to fill in some of the blanks.
Rob Kniaz, a partner at Hoxton Ventures, said that while he wasn’t aware of investors using ChatGPT to pass on pitches, he personally uses the tool to write investment memos.
“I do think CGPT is really useful when you get a bit of writer’s block. Investment memos are probably somewhat automatable but really they should be a reflection on what the deal really is, but it does help when you’re stuck on a way to phrase things,” he told TechCrunch via email.
Kniaz is also looking to apply ChatGPT to other segments of the deal pipeline, such as generating categories for companies based on a description (e.g., “online advertising,” “adtech,” “investing app — fintech,” flight search — travel”).
“I can look at an event and use [ChatGPT] to categorize and geolocate companies or otherwise do a lot of neat stuff very quickly,” Kniaz said. “The drawbacks are, of course, that the data are stale, so you can’t really do much time-sensitive market research or things like that,” he added, referring to the fact that ChatGPT was trained on internet data dating to before 2022. “Even finding competition is tough because if it’s early stage then it’s probably too new to be part of the main corpus.”
The deal breakers
Yoni Rechtman, an investor at Slow Ventures, tried using ChatGPT in a pass email to a startup but was unimpressed. He had to spend time explaining why he was passing in bullet points and changing the tone to sound like it came from him. Ultimately, it didn’t feel much faster just writing the email himself. He didn’t end up sending the memo.
“Sounds like more of a joke than a real thing,” Rechtman said about investors using ChatGPT in their work.
SignalFire’s Josh Constine, former editor at large at TechCrunch, is comfortable using AI to do his job. The venture outfit uses Beacon AI, an in-house technology, to help sort through which startups to talk to. Still, he remains wary of ChatGPT’s use within firms.
For example, Constine noted, ChatGPT wouldn’t be good at writing investment memos because the most critical information on early-stage startups, such as revenue, growth rate and retention, aren’t publicly available. This is different from the AI’s ability to write about, say, the history of zippers, because that is a more well-chronicled story with data, stories and filings to look through. Investment decisions are also too nuanced to leave to AI, he argued.
“Writing rejection letters is one of the toughest and most emotionally draining parts of being a VC, though, so I can see why some investors might try to outsource to ChatGPT, but we don’t out of respect for founders,” Constine said.
Brianne Kimmel, founder of Worklife Ventures, doesn’t use ChatGPT with founder-facing operations because she would “hate for there to be a misfire or some sort of language that makes it sound generic, especially with the markets where they are today.” Reputation, she reminds, is everything.
She did, however, use ChatGPT to pitch journalists on why AI isn’t going to take over our jobs. She signed the email off stating “sent using ChatGPT” — a phrase she thinks made some journalists bite out of curiosity.
“It’s not automating the important conversations we have with journalists, ” Kimmel said, “but I think it’s sufficient for things that are pretty straightforward.”
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