Insight Partners' Deven Parekh on why the firm is diversifying while everyone else bets the farm on OpenAI and Anthropic
Insight Partners co-CEO Deven Parekh advocates a diversified, portfolio-driven investment strategy, favoring early-stage smaller checks over late-stage or buyout rounds given current market conditions Parekh holds stakes in both OpenAI and Anthropic, viewing them as complementary plays (consumer vs. enterprise) rather than direct competitors at their current funding stages AI risk concerns (e.g., bio-weapon creation) are acknowledged but outweighed by expected benefits, particularly in healthcar
Analysis
TL;DR
- Insight Partners co-CEO Deven Parekh advocates a diversified, portfolio-driven investment strategy, favoring early-stage smaller checks over late-stage or buyout rounds given current market conditions
- Parekh holds stakes in both OpenAI and Anthropic, viewing them as complementary plays (consumer vs. enterprise) rather than direct competitors at their current funding stages
- AI risk concerns (e.g., bio-weapon creation) are acknowledged but outweighed by expected benefits, particularly in healthcare where AI is already processing millions of patient records for predictive diagnostics
- Fast-moving venture rounds are creating overvaluation pressures reminiscent of 2021, with less incremental data justifying higher prices per round
- Physical AI/robotics remains in a "watch and wait" phase, still largely classified as science projects rather than viable businesses
Why It Matters
This interview offers a rare candid perspective from one of the most successful but low-profile VCs on how top firms are navigating the AI investment boom, balancing risk perception against opportunity, and strategically positioning across competing frontier AI labs. For AI practitioners and investors, it highlights the tension between aggressive valuations and actual risk reduction in fast-moving markets.
Technical Details
- Insight Partners manages $90 billion AUM and has invested in Databricks (led/co-led rounds), OpenAI, and Anthropic; operates across early-stage, growth, and buyout with a temporal—not fixed—allocation strategy
- Current strategy favors $20–25M Series A checks with follow-on doubling rather than $500M late-stage bets, as exemplified by the Wiz investment thesis
- Parekh notes AI infrastructure talent remains concentrated in San Francisco, while vertical AI talent (e.g., financial services at Ramp) shows geographic diversity such as New York
- Buyout activity has stalled due to high rates, unresponsive debt markets for software, and reduced exit multiples; no major buyout since 2024
- Information-sharing restrictions apply at Series A/B stage for competing companies, though some founders raise concerns over as little as 2% revenue overlap
Industry Insight
- The shift toward earlier-stage, smaller bets reflects a structural response to valuation inflation driven by runaway fundraising cycles—investors should reassess whether speed of closing rounds correlates with genuine de-risking
- Investing in rival AI labs simultaneously (OpenAI + Anthropic) is becoming feasible only at later stages when capital needs outstrip exclusivity demands, signaling a maturation in how VCs manage conflict-of-interest constraints
- Physical AI and robotics remain on the periphery of serious VC deployment; expect increased allocation only after demonstrable commercial adoption milestones are met, not on capability demos alone
Disclaimer: The above content is generated by AI and is for reference only.