VCs Elad Gil and Sarah Guo on the risks and rewards of funding AI: ‘The biggest threat to us in the short run is other people’

Last week, at our first StrictlyVC evening of the year, prominent AI investors Elad Gil and Sarah Guo joined us in San Francisco to talk about how they think about AI investing in a world where deals were getting bid up feverishly two months ago, and where reportedly, some startup teams are now looking to sell because of the costs involved with building their software.

We talked about some of their deals, whether valuations have gotten wildly ahead of themselves and also how the two — who cohost a popular AI podcast together — operate.

Gil, for example, has reportedly raised more than $2 billion from investors in the last couple of years, money that he is investing almost single-handedly. At the event, he declined to confirm that amount but said that he always pulls in support of some kind. For example, after a former chief of staff founded his own company, Gil brought aboard a couple of “highly technical” hired hands to help him understand some of the new tech bubbling up. One of these is Shreyan Jain, a former software engineer at Ramp who has two computer science degrees from MIT,  and who has “built an embedding playground” with another engineer in Gil’s orbit so they can “basically swap in and out any underlying vector [database] in any embedding framework, so we can play around with different tools,” said Gil.

Gil — who also pours his own capital into deals despite raising so much from outsiders — also underscored the importance of creating clear guidelines with one’s own investors to get ahead of perceived conflicts of interest. “If you have that clarity of how you’re going to act, it makes a huge difference. It gets rid of ambiguity, it gets rid of uncertainty, it gets rid of the [bad] feelings,” he said.

Image Credits: Slava Blazer

Guo is taking a more traditional approach with her year-old firm, Conviction. Calling it a “baby little $100 million fund” compared with Gil’s billions of assets under management, Guo says she has already brought aboard two other investors, a talent partner, and an operations person. She also said she has enough skin in the game that she doesn’t take lightly any decisions in the “relatively concentrated portfolio” that her team is building. “I’m a large investor in my own fund,” she said. “Like, I actually need the companies to work over time.”

If you want to hear more specifics about their respective approaches to funding deals (they have both invested in Harvey and Mistral, among other companies); how they protect themselves in case they fund AI tech that’s later abused; what they see as the biggest questions related to foundation models like GPT-4, and why Gil is concerned with “French values” (not really), do check out our conversation.

For what it’s worth, Gil says during this discussion that he has probably invested the most over time in the defense tech company Anduril, whose cofounder Trae Stephens is speaking at our next StrictlyVC event in Los Angeles on February 29.

If you want to check that one out in person, you can learn more here. Our San Francisco event sold out (and was very fun). We expect this next one to sell out, too, so don’t wait too long if you’d like to come.

(Special thanks to Cloudflare for letting us use its beautiful San Francisco headquarters.)

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