Indian VC funds leverage AI to evaluate deals, boost workflows

Indian venture capital funds are using artificial intelligence (AI) to automate tasks traditionally handled by junior staff and analysts. This shift is dramatically accelerating workflows, compressing week-long processes into a mere day or two.

Partners at two large venture capital firms in India told ET that they are now turning to generative AI platforms such as ChatGPT's deep research for their research on potential deals and target portfolio companies. This is a growing trend where VC firms are rapidly integrating those tools in their operations to boost efficiency, industry sources and executives told ET.

For prominent VC firms, AI serves as a support system, pacing up research and analytical work. However, some experts argue that AI is not yet capable of completely replacing human analysts in the venture capital process.

Busywork assistant

Dinesh Pai of Zerodha's Rainmatter said AI helps speed up the due diligence process. "AI helps the team through features like deep research to understand specific sectors, identify trends and find similar products/services — not to suggest that they are any useful in understanding how the startups will do," he said. Early-stage venture capital firm Leo Capital said AI tools are helping strengthen its deal funnel and conduct preliminary research.

"Being a generalist fund, deep research tools allow us to get up to speed on new verticals quicker and be better informed on the problems being tackled by teams, especially during initial phases of engagement," the firm's general partner Ravi Srivastava said. Cactus Venture Partners, an early growth-stage venture investment firm, also uses AI extensively for research.

"Generative AI tools distil information and give us synthesised versions to help us understand an industry, a company or its opportunity," general partner Rajeev Kalambi told ET.

Productivity high

AI tools are also significantly enhancing the productivity of associates and researchers, Kalambi explained. "Let's say it took us a week or 10 days to research a deal or a company that hit our desks. But today, we can do the entire research and evaluation process within a day or two and spend more time evaluating it."

Vaibhav Domkundwar, founder and CEO of pre-seed venture firm Better Capital, said AI agents like ChatGPT and Claude help them evaluate markets and opportunities. "Often, all it takes is dumping all the material of a startup into a project and asking AI to generate a Bessemer-style memo covering all the strengths and weaknesses," he said. AI is also aiding VC firms with portfolio management by analysing performance data. Portfolio companies submit monthly trackers, which AI systems use to compare and assess industry peers' performance during the same period.

Arjun Malhotra, general partner at Good Capital, calls Anthropic's Claude the team's "collective brain". "We tend to prompt Claude to help us visualise growth trajectories that might otherwise remain buried in spreadsheet hell," he wrote in a post on X.

These venture capital firms are increasingly adopting AI tools to enhance, rather than replace, existing workflows. These tools are helping streamline processes that would have otherwise taken significantly longer, said investors.

Sonal Saldanha, vice president of investments at 3One4 Capital, said AI tools have made the associates and research teams more independent and eased the busywork associated with the job.