Like everything else these days, early-stage investing is in the middle of a seismic shift. Angels are using AI to source most of their deals, spot patterns in business models, and predict the odds of a life-changing exit.

So what’s next for startups who are fundraising, and how can founders pitch successfully to AI-enabled investors?

How AI Is Rewriting the Funding Playbook

Early-stage investors used to rely mainly on personal networks and intuition. In this environment, getting funded often depended on who you knew. Investors were (often fairly) criticized for making snap judgments, or for blindly buying into whatever was trendy that quarter. Now, AI can make the review process both more objective and more thorough.

Here are some ways investors are using AI right now, and how founders can craft their pitches accordingly.

1. Scanning large, unstructured datasets. Parsing and cross-referencing data has become exponentially cheaper. Models like ChatGPT can digest everything from code commits to founders’ social posts. This lets investors do more due diligence, all in a fraction of the time it used to take.

Founder takeaway: Keep your deck concise for initial conversations, but prepare a machine-readable virtual data room for all the other information you want to share. Deliver information that’s tagged accurately and organized under headers, to make it easier for AIs to absorb. Markdown, json, and csv files may replace some of your spreadsheets and charts.

2. Generating evidence-based valuations. Instead of relying on gut feelings, investors can use data-driven LLMs to come up with a valuation that makes sense. It’s getting easier to identify truly comparable companies and benchmark potential investments’ performance.

Founder takeaway: When suggesting a valuation, show how your metrics justify it, and list your own comparable companies. You might even consider building an agent to interface with your investor’s AI, share data, and provide a number based on your reasoning (all subject to human approval).

3. Streamlining deal documents. Many business and legal teams are using AI-based platforms to create term sheets, redline SAFEs and notes, and speed up closing logistics. A growing number of SaaS options are available to do corporate housekeeping tasks like converting an LLC to a corporation or cleaning up a cap table.

Founder takeaway: Unlike your investors, you aren’t using these tools every day – so take some time to understand their capabilities. Consider delegating to advisors who have been through this process before. They can help you negotiate contracts and manage corporate structures using investors’ preferred online services.

The Next Wave of AI in Startup Funding

At the moment, AI excels at analyzing large amounts of pre-existing data. As one observer has put it, these models are “taking the average of the internet” to offer facts and options, with varying degrees of accuracy. They don’t yet have a top-tier investor’s ability to see ahead of the market, and may never get there. In addition, the cost of compute forces all but the most deep-pocketed investors to budget carefully when developing customized AIs. Given these constraints, it’s unlikely that even specialized AIs will completely replace angel investors.

However, tech almost always gets better and cheaper over time, so investors’ use of AI will only accelerate. Here’s what LLMs and agents might bring to the table in the near future – and some steps founders can take now to stay ahead of the curve.

AI develops multiple personalities
Instead of an in-person meeting, your first encounter with investors may be an API call request from their fund’s proprietary AI personas. Expert systems trained in different disciplines will search your data, query your strategy, and stress-test your numbers.

You can prepare by prompting your own AI to act as a similar group of virtual experts. This “team” can work tirelessly to find and fix any flaws in your presentation.

Market simulation at scale
Investors’ proprietary LLMs will be able to model competitors, customers, and market forces, then simulate thousands of runs. Fund managers can then compare these scenarios with historical data to get a better sense of which companies are likely to dominate their industries.

Founders can use the same process to make their case. Instead of a vague hockey-stick revenue projection, show the conditions under which your company can deliver 10x+ returns. As just one example, you could tell investors, “If our MRR is $____, and we have a sales cycle of ≤45 days, and our LTV/CAC ≥3.5x, 95% of our simulations show our profits growing at least ___% within 2 quarters. We can achieve this with an investment of $___ and our current burn rate of $___.”

Mentor-as-a-service?
One way angels add significant value is by mentoring founders. Humans can see connections where none seem to exist, imagine future states, and provide encouragement and moral support to founders. None of these skills will be replaced any time soon.

That said, many tech leaders are enthusiastic about building AI-enabled “second brain” databases to store and share their historical knowledge. Imagine being able to chat with your favorite investor’s second brain, and get instant advice based on lessons learned throughout their career.

The Bottom Line

There are still practical, cultural, and regulatory barriers to AIs becoming autonomous investing engines. Still, it’s likely that founders will soon be interacting with agents, LLMs, and algorithms that haven’t been invented yet. These tools will sift huge volumes of data to find the best deals, regularly adjust founder strategies based on new information, and help calculate the optimal price and timing for successful exits. To build with this future in mind, founders should be tailoring their pitches to AI-enabled investors today.

AI is no longer just an experiment—it’s shaping every stage of the funding process. Startups that learn to communicate fluently with both humans and machines will secure faster, more favorable funding. The companies that adapt now will be the ones investors can’t ignore.

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If you’re gearing up for conversations with AI-enabled angels, Spark + Sterling helps founders refine their pitches, get ready for due diligence, and secure funding. To learn more, please contact us.