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Addressing AI in software pitches
A common problem I’m seeing many software companies running into lately is that they don’t have a plan for addressing the arguments by VCs that their startups lack tech defensibility due to the rise of AI.
Many VCs are concerned that AI is the start of the end of software businesses. Since we are now moving towards a world were software development costs are non-existence, there is no longer inherent value in developing software. In short, they are worried that you’ll spend millions building software, and in a year, someone will type “Clone Startup X” into an AI model, and someone will have an exact replica of your product without millions invested.
So, how do we take this seemingly insurmountable obstacle and turn it into a positive for your software business?
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Acknowledge the Risks - When trying to convince someone to look at this from a different perspective, you need to acknowledge that they are right about certain risks. Yes, it will be easier to create software quickly, and development costs will be reduced. The VC is right about this, and you both agree.
Demonstrate How the Risk Can Become An Advantage - The fact that development costs are near zero can be seen as a negative, but it can also be a positive. Imagine being able to iterate and continuously improve your product at almost no cost. That is a massive advantage that helps you stay ahead of any clones.
Untapped potential - AI also means that software can now accomplish a lot more than it could 5 years ago. This means that by incorporating models into your product, you can extend your addressable market and potential revenues.
With the right perspective framer you can actually turn an argument “AI makes software businesses valueless” into a positive “AI gives software businesses new opportunities for growth”.
This is the difference between being good and bad at pitching. You are able to take the same investor and get them to commit funds instead of rejecting you by making smart, rational and reasoned arguments in favour of your company.
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Are you looking to grow your business? Here is how I can help:
📱 Book a Strategy Call to get 1:1 feedback on your pitch, pitch deck and/or fundraising strategy. (If you need general startup advice, then reply to this email, and I’ll let you know if/how I can help.)
Onwards and Upwards,
