Venture capital firms are now using AI to make investment decisions. 

San Francisco-based venture firm Trac.VC is using only AI to determine which startups could become the next unicorn — and invests in those companies, co-founder and Managing Partner Fred Campbell said during FinovateFall in New York this week. 

“No human has ever made an investment decision in my company,” he said.

“We’ve invested in 114 companies, and our [return on investments] are in the top 10 — and oftentimes in the top 5% — of VCs across the globe,” Campbell said. 

The approach 

Trac.VC, founded in 2013, approaches its AI decision making by dividing startups into two buckets and then analyzing them for pattern recognition and pure innovation, Campbell said. Trac.VC’s AI looks for patterns in new age companies that can define their odds of success, he added. 

The AI looks for patterns like revenue growth, competitors gaining market share and how similar companies have fared in the marketplace, he said. 

“AI will beat humans in pattern recognition [because it] sees more subtle differences,” Campbell said. “It can make better predictions about future behavior and future success in the marketplace.” 

The VC’s AI model, built in house, determine the likelihood for a successful startup, he said by detecting: 

• Patent-filing cadence; and 

• Historical revenue patterns.  

With AI, Trac.VC can fast-track investments in up to 12 companies a year, compared with its peers, which are investing on average in just two and a half companies per year, Campbell said. 

“Recently, venture debt divisions of major banks are coming to us because they want to bank those [startups] earlier that will become their huge venture debt clients, and for other banking needs,” he said. 

Trac.VC this year has invested in the following startups: 

• $8.8 million in space tech company Orbital Operations; 

• $8 million in data company The Swarm; 

• $8 million in biotechnology firm Future Fields;  

• $5.8 million in communications company Cascade Space; and 

• $4.3 million in AI-driven data analytics company Sourcetable. 

Major trend in VC 

According to a Private Capital Predictions 2025 report published in March by CRM service provider Affinity, 92% of VC firms are using AI within their workflows for due diligence, relationship management and to discover new investment opportunities. 

READ MORE: Private equity AI use cases emerge 

Other VC firms including Team8 and Valor Ventures are also using AI to guide their investing decisions. 

“We are starting to use AI to evaluate a company’s financial books and do due diligence around them,” Eyal Eliakim, head of AI at Team8, told Bank Automation News. “It makes the process much quicker, and we always have a human in the loop to cross-check our findings.” 

As AI improves, many VC firms will start using it not only to evaluate a company’s deck but also to find startups that might fly under the radar, Eliakim said. 

Similarly, Valor Ventures is deploying AI across its investment management lifecycle and has developed Vic, an AI tool called that helps the firm speed information sourcing and competitive analysis, according to a June 5 company blog post. 

Vic ranks investment opportunities, speeds up diligence and monitoring, and proactively contacts founders when key milestones are met, according to the company. 

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