Davidovs Venture Collective (DVC), an investment firm co-founded by Marina Davidova and Nick Davidov, has announced the launch of a new $75 million fund. This fund is specifically targeting Series A and Series B stage artificial intelligence (AI) startups. The firm is distinguishing its approach by leveraging a vast network of AI talent and utilizing AI tools to manage its investment processes, replacing traditional analyst roles.
Key Takeaways
- DVC has launched a new $75 million fund for Series A and B AI startups.
- The firm has replaced human analysts with a network of 170 limited partners (LPs) and AI tools.
- These LPs include experts from major tech companies like OpenAI, Google, and Meta.
- AI agents assist with deal memos, due diligence, and portfolio monitoring.
- LPs receive 30% to 40% of carried interest for their contributions.
New Investment Strategy for AI Startups
DVC, established in 2021 and based in San Francisco, is known for its innovative investment model. The firm previously operated a seed fund that deployed $21 million into 120 companies. These investments included notable AI firms such as Perplexity, Etched, Thinking Machines Lab, and Higgsfield.
The new $75 million fund represents a significant expansion of DVC's focus on the rapidly growing AI sector. This capital infusion aims to support AI companies that have moved beyond the initial seed stage and are ready for substantial growth.
Fund Details
- Total Fund Size: $75 million
- Target Stage: Series A and Series B AI startups
- Current Secured Funding: $40 million
- Remaining to be Finalized: $35 million with institutional investors
Leveraging a Network of AI Talent
A central element of DVC's operational model is its extensive network of limited partners (LPs). This network comprises 170 individuals, including founders and engineers from leading technology companies. These companies include OpenAI, Google, Meta, Microsoft, Tesla, SpaceX, and Perplexity.
Instead of hiring in-house analysts, DVC relies on these LPs to source and vet potential deals. This approach allows the firm to tap into a wide pool of specialized knowledge and industry insights directly from those at the forefront of AI development.
"We have really incredible talent that we would never be able to hire," Nick Davidov stated. "They're the kind of people that Zuckerberg offers a hundred million dollars to, and they work for us for free on their weekends."
This model suggests a highly efficient and cost-effective way to access top-tier expertise. The LPs contribute their time and knowledge, driven by the prospect of shared profits from successful investments.
AI Tools Replace Traditional Analyst Roles
More than a year ago, DVC made a strategic decision to eliminate its five part-time and full-time analyst positions. These roles were traditionally responsible for deal sourcing, due diligence, and portfolio monitoring. Marina Davidova confirmed this shift, highlighting the firm's commitment to integrating AI into its core operations.
The firm now equips its network of LPs with advanced AI agents. These agents are designed to assist with various aspects of the investment process, including:
- Drafting deal memos
- Conducting due diligence
- Monitoring portfolio company performance
- Identifying specific needs of founders
- Matching founders with relevant experts within the DVC community
The LPs themselves played a role in developing these AI agents, ensuring they are tailored to the specific demands of venture capital investment in the AI sector. This collaborative development process further integrates the network into DVC's operational fabric.
Industry Trend: AI in Venture Capital
DVC's strategy is part of a broader trend within the venture capital industry. Other firms are also exploring or implementing AI to automate tasks traditionally performed by associates. Sri Chandrasekar, managing partner at Point72 Ventures, previously predicted that AI could reduce headcount in some VC roles by over 50%. This indicates a significant shift in how investment firms operate, driven by efficiency and data analysis capabilities offered by AI.
Incentives and Human Oversight
The LPs in DVC's network provide crucial support to founders, assisting with areas such as hiring, sales, product development, and networking. In return for their contributions, these investors receive a share of the carried interest, which represents a portion of the profits generated from successful investments.
Nick Davidov explained the distribution model: approximately 30% to 40% of the carried interest from each deal is allocated to the community of investors. Another 30% to 40% goes to the general partners, while the remainder is split between Marina Davidova and himself.
Despite the reliance on AI tools, DVC acknowledges the irreplaceable role of human judgment. Marina Davidova emphasized that AI cannot fully replicate human capabilities, particularly when it comes to assessing qualitative aspects like a founder's mental state and leadership qualities. This suggests a hybrid approach where AI enhances productivity but human insight remains critical for final investment decisions.
Expanding Leadership and Future Outlook
Alongside the launch of the new $75 million fund, DVC has strengthened its leadership team. The firm has onboarded two new general partners: entrepreneurs Mel Guymon and Charles Ferguson. Mel Guymon will oversee business sales support and governance, bringing expertise in operational scaling.
Charles Ferguson will focus on deal origination, identifying promising new AI startups for investment. Additionally, Alexey Rybak, a product manager at Meta AI, has been appointed as a venture partner. These additions aim to enhance DVC's capabilities in both identifying and nurturing high-potential AI ventures.
The new fund has already secured $40 million, with discussions ongoing to finalize the remaining amount with institutional investors. This indicates strong market confidence in DVC's unique, AI-driven investment model and its focus on the burgeoning AI startup ecosystem.