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Small Teams Are The Future & PE/VC Impact

One chart says it all (credit to Ben Lang on X). What does it mean for PE/VC? We’ll dig deeper below, but everyone should be asking - can we do more w/ less? That’s what the competition is doing…

Update on the State of Venture Capital

We recently shared key takeaways from AngelList’s “The State of Venture 2024” report, summarizing insights from Chris Harvey’s LinkedIn post. Since the report’s release, several notable developments have emerged in the venture capital landscape:

AI Dominance Continues

“In 2025, VC investments in AI companies are continuing the momentum from previous years. Global venture funding totaled $26 billion in January 2025, of which AI-related companies garnered $5.7 billion, accounting for 22% of overall funding.”

Shifting Investment Strategies

While 2024 saw aggressive funding and rapid scaling, 2025 has ushered in a more disciplined approach: “The focus now appears to be on sustainable growth and profitability. Investors are predicted to become more selective, favoring companies with solid fundamentals and proven business models to navigate economic uncertainties.”

Regulatory Concerns

Regulatory scrutiny has intensified in 2025, particularly in the AI sector:

“Regulatory concerns are also playing an increasingly significant role in shaping VC investment strategies in AI. Governments worldwide are ramping up efforts to regulate AI technologies to address issues such as data privacy, algorithmic bias, and security risks.”

Economic and Market Dynamics

The venture capital landscape in 2025 is showing signs of recovery:

“One of the biggest changes expected is a dip in interest rates. Lower interest rates make borrowing cheaper, which is great news for both VCs and startups looking to secure funding. Having access to capital without the heavy burden of high-interest loans opens up a world of possibilities.”

“After a rollercoaster ride since 2021, early-stage startup valuations have been on a downward trend. But here's the silver lining: these valuations are expected to stabilize in 2025. This stabilization means that startups can attract investment without the pressure of inflated valuations, hopefully making the market fairer and more sustainable.”

Attention Was All We Needed - Now It’s All We Lack

Venture Bystander recently released their post “Attention Was All We Needed -Now It’s All We Lack”. The article explores how intelligence, design, execution, and distribution—once human-driven competitive advantages—are increasingly commoditized due to AI advancements.

It argues that in a world where intelligence and execution are "too cheap to meter," attention remains the last scarce resource. There are a lot of interesting thoughts/key takeaways and here are some of them.

Interesting Thoughts / Key Takeaways

Intelligence Too Cheap to Meter

• “Back in 2017, the paper Attention Is All You Need introduced the Transformer architecture, the engine behind today's Large Language Models. Since then, the cost of deploying intelligence has plummeted, turning complex reasoning and coding from rare flashes of genius into near-zero marginal-cost commodities.”

• “Once extraordinary ability becomes commonplace, it stops being a competitive edge.”

Design and Taste Too Cheap to Meter

• “What once demanded separate skill sets (graphic design and software engineering) can now be assembled by prompting an AI.”

• “Yet, does taste even matter in most cases? If taste is a mix of cultural and social norms, I'm just not sure it matters when you're talking about building the majority of software.”

• “It’s only a matter of time before a model fine-tuned on top-voted or award-winning sites figures out what truly resonates.”

Agency in a Multi-Agent World

• “If intelligence and design are both trivial, one might assume that human agency (vision, team-building, orchestrating projects) becomes the new differentiator.”

• “Once multi-agent systems can run complex workflows, navigate websites, and connect to a growing suite of external tools, entire operations could be automated.”

• “At this point, who, or what, gets authorized to run these agents? Agent authentication is becoming a critical question: who gets permission to spin up complex workflows, act on behalf of a business, or execute autonomous decisions?”

Distribution: The Next Frontier

• “If AI can both generate content and dictate its reach, does distribution become a game of who can best train their models on human engagement patterns? Or does it shift back to pure relationships, where trust, not just algorithms, determines who wins?”

• “Trust will matter more than ever before.”

• “If software is abundant, trust becomes the new scarcity.”

Intelligence is Cheap, Attention is Priceless

• “Attention, in a human sense though, has emerged as the last true scarcity. If attention is all you need, it's all we lack in the world of infinite products.”

• “No matter how advanced AI becomes, it cannot manufacture more hours for additional human engagement.”

• “Borrowing from Herbert Simon’s concept of the attention economy, ‘A wealth of information creates a poverty of attention.’”

“Ultimately, Attention Is All You Need may be more than just a seminal research paper. It also serves as a reminder that genuine human attention remains the final bottleneck, one scarce resource AI cannot replicate or conjure out of thin air.”

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