The job scope of a tech investor is, essentially, to talk. With founders launching new products. With portfolio entrepreneurs seeking support. With other investors (GPs) exchanging insights. And with LPs tracking fund performance.
Over time, these conversations form a powerful radar: they help identify trends, timing, market dynamics, and funding patterns. For a long time, this engine worked in a relatively predictable way — until Artificial Intelligence began changing everything.
As Audrey Lee wrote on GVCdium, AI is “replatforming” venture capital itself - not just changing which startups get funded, but how investing is done. She describes a structural transformation: automated workflows replace analysts and associates, models accelerate decision-making, and capital concentrates in fewer rounds and in fewer hands.
AI is dismantling the old logic of networking, intuition, and learning by repetition that has shaped the industry for decades, creating a new venture model - faster, leaner, and increasingly dependent on data and algorithms. This trend is most visible in late-stage VC. At the super early stage, human judgment will remain an advantage for a long time.
The Efficiency Revolution
AI is taking over more and more human functions across company areas: coding, marketing, analytics - you name it. This has drastically reduced team sizes and operational costs. Revenue per employee has skyrocketed, and as a result, startups need far less capital to grow and reach break-even or even profitability.
Today, we’re seeing startups hitting meaningful ARR with small teams and in record time. This new era of efficiency has given rise to the term “Seed-Strapping” - companies that raise a single round and use that capital so efficiently that they scale to profitability without additional fundraising.
It’s worth noting that most early-stage capital typically goes toward team building - and every new round takes time and energy away from founders, who must step away from product and operations to do roadshows and engage investors. It’s a tough path, even for the most experienced and well-connected.
The Impact of This New Reality
Imagine two co-founders who, after the Seed round, still own 80% of the company and sell for US$40 million - each walks away with US$16 million. To achieve the same outcome after several rounds through a Series C, when together they’d own just 10%, the company would need to sell for more than US$320 million. And there aren’t many acquisitions of that size in Brazil.
On top of dilution, there’s the ESOP (Employee Stock Option Plan), which further reduces the founders’ stake - and a longer journey carries far more risk. Markets shift, competitors emerge, co-founders fight (very common), and capital can dry up. In Brazil, regulatory instability, bureaucracy, and macroeconomic volatility compound these risks. Few startups make it to Series C - chasing unicorn status may be tempting, but the probability of capturing that value drops sharply over time.
Implications for the Venture Capital Ecosystem
In a way, this shift reinforces Verve Capital’s core thesis: being the first check for tech startups in Brazil, with an exclusive focus on Pre-Seed, regardless of sector.
If Seed becomes the only round, everyone - including large funds - will try to get in earlier. This increases competition and pushes valuations higher. Today, we’re seeing Pre-Seed valuations matching (or even surpassing) those of 2020/2021.
The problem is that this movement distorts ecosystem balance. Large funds with hundreds of millions under management need massive exits to deliver meaningful returns. Meanwhile, startups that exit through M&A deals between US$20M and US$100M can produce excellent DPI for a small fund but barely register for a large one.
Beyond valuation inflation, there’s the question of the role each fund plays at each stage. Early on, capital matters - but what truly makes the difference is strategic support: go-to-market, intros, distribution channels, hiring, financial structuring, deck review, legal support, and more. Big funds, with heavier structures, rarely dedicate that level of attention to companies that are still, essentially, early projects.
There’s a natural “ladder” between rounds - A, B, C - and we believe the same applies to investors. Smaller, more focused funds add the most value in the early days and lose relevance as companies mature. Another key difference between big and small funds is alignment of interests. Microfund managers like Verve Capital are fully aligned with their LPs on risk and return: with low AUM and virtually no management fee, they only win through carry - and only after returning all invested capital, adjusted, on an uncertain future timeline.
Conclusion
Seed-strapping is not just an efficiency trend - it’s a structural shift in venture capital. It redefines the role of capital, the growth pace of startups, and the balance between small and large funds.
