Strategic buyers acquire companies with proven AI ('agentic') capabilities not just for their own value, but to use them as a blueprint to transform their larger organization. This makes AI adoption a key driver of M&A attractiveness and exit value.

For fragmented, tech-averse industries, GC funds startups to first build an AI automation platform. Then, instead of a difficult sales process, the startup acquires traditional service businesses, implementing its own AI to dramatically boost their margins, providing immediate distribution and data.

A new startup strategy involves acquiring traditional businesses and dramatically increasing their margins by integrating AI. This approach requires a unique blend of M&A, operational change management, and AI expertise, differing from typical venture-backed company creation.

Top-tier venture capital firms are developing internal platforms with such demonstrable results and strong reputations that founders choose them over competitors offering higher valuations, seeking access to their unique support ecosystem.

An AI-native VC firm operates like a product company, developing in-house intelligence platforms to amplify human judgment. This is a fundamental shift from simply using tools like Affinity or Harmonics, creating a defensible operational advantage in sourcing, screening, and winning deals.

Companies with strong, pre-existing developer platforms, data infrastructure, and analytics layers see the highest returns from AI agents. Foundational investments that made humans efficient provide the necessary leverage for AI to operate effectively and safely at scale.

Expect more acquisitions of VC firms by large asset managers. The strategic driver isn't just AUM, but the ability to apply cutting-edge AI and tech from the VC portfolio to accelerate growth and EBITDA in their traditional private equity-owned industrial and consumer companies.

In a significant departure from their traditional buyout model, major private equity firms like Blackstone and KKR are creating and funding new AI infrastructure companies from the ground up. This signals a strategic shift towards venture-style creation to capture AI-driven growth opportunities.

South Park Commons exemplifies a new trend where VC firms operate like tech companies, dedicating 20% of their staff to an in-house engineering team. They build custom AI agents for sourcing, diligence, and portfolio support, creating a significant competitive advantage.