AI is changing the role of venture capital for startups

As new tech businesses can use GenAI for product development, they need less VC funding

- SIDDHARTH PAI

Last week, I wrote that computer code spewed out by Generative AI tools might remake the Indian software space. The conclusion of that piece was that we can expect a polarization of software engineering roles. At one end, a few elite engineers with exceptional architectural and business-function skills will command fat pay-cheques to troubleshoot code generated by artificial intelligence (AI). On the other, leaner teams of low-level engineers who generate code using AI assistants will replace the vast teams once required to execute large-scale software projects.

Insofar as the technology startup space represents the leading edge of what eventually transpires in the software industry, this phenomenon is already playing out. Before the rise of Generative AI's capability to write syntactically perfect base-level code in any programming language, software startups looking for investment from venture capital (VC) firms hunted for large rounds of finance to pay small armies of programmers to write software code. This is now changing.