The current surge of innovation and investment surrounding artificial intelligence represents merely the opening chapter of what many predict will evolve into one of the most profitable and transformative eras in the history of venture capital. This technological and financial momentum, while promising extraordinary returns for those positioned wisely, also carries the looming certainty that numerous fledgling companies will falter under the immense weight of competition and inflated expectations. Such is the nuanced interpretation of Mel Williams, cofounder and partner at TrueBridge Capital Partners—a renowned fund-of-funds manager overseeing approximately $8 billion in assets, with an impressive portfolio that includes backing esteemed venture firms such as Founders Fund, Thrive, and Sequoia Capital.
Unlike traditional venture capitalists, who dedicate their resources to identifying and nurturing high-potential startups, Williams’ unique role is to identify and invest in the venture capital firms themselves. This meta-level approach grants him a panoramic, ecosystem-wide perspective on the shifting landscape of innovation and capital formation. From this elevated vantage point, he offers a measured but striking forecast: artificial intelligence has the capacity to generate astonishing economic value over the coming decade, yet a significant portion of the startups vying for dominance today will inevitably be swept aside.
In a recent conversation on Jack Altman’s “Uncapped” podcast, Williams reflected on the state of the market and remarked that we now stand at what he characterizes as the early crest of an immense AI-driven wave. He cautioned that while this wave will bring forth unparalleled opportunities for wealth creation, it will simultaneously bring destruction to those unable to find their foothold in the emerging order. “We’re going to see a great deal of carnage over the next ten years,” Williams said, emphasizing that the scale of value creation in this period could surpass anything previously witnessed across the entire history of the venture industry.
Discussing the present investment climate, Williams noted that the earliest stages of AI entrepreneurship have grown notably overheated—a “frothy” environment where ambition and reputation often outweigh substantive product validation. Founders boasting prestigious résumés, particularly those with tenure at leading research organizations such as OpenAI or other elite laboratories, are frequently able to raise vast sums of capital at extraordinary valuations, even in the absence of proven product-market fit. At these formative stages of company development, he explained, investors appear increasingly willing to fund prominent individuals who simply check a few key credibility boxes, rather than waiting for tangible evidence of traction or commercial viability.
By contrast, Williams observed that later-stage or growth-level deals display a measure of moderation and rationality. At that point in a company’s lifecycle, valuations tend to align more closely with those found in public markets, and investor attention shifts decisively toward demonstrated revenue streams and sustainable growth metrics. This bifurcation within the venture ecosystem highlights both the intoxicating allure and the potential perils of AI-focused speculation.
From Williams’ perspective, artificial intelligence is not only reshaping the startup environment but also speeding up one of venture capital’s most defining characteristics: its power-law distribution of outcomes. In other words, the sector has always been dominated by a small handful of outlier successes that generate the vast majority of overall returns, and AI seems poised to intensify this concentration of wealth and influence. “The magnitude of the winners is even greater today than it has been in prior cycles,” he said, predicting that the outsized scale of leading companies in this field will redefine market expectations.
He attributes this amplification to three converging forces. First, AI-based software products, once developed, can scale at lightning speed across digital infrastructures with almost negligible marginal cost. Second, enterprise clients are adopting AI technologies at an unprecedented rate, often allocating explicit and sizable budgets for the integration of these tools into core business operations. Third, consumer enthusiasm accelerates uptake even further, as evidenced by the viral adoption patterns of products like ChatGPT, which demonstrated how swiftly an effective application can permeate public consciousness. The combination of these dynamics suggests that startups able to achieve authentic product-market fit might rapidly solidify their dominance, whereas those that miss the mark will struggle to survive.
Outside the AI ecosystem, however, Williams notes that the overall venture capital landscape remains comparatively balanced and even healthy. Beyond the confines of artificial intelligence, valuations appear sensible, and funding decisions continue to hinge on measurable progress and revenue milestones rather than speculative hype. In this broader context, venture markets retain an element of discipline and restraint. Yet, Williams cautions that the gravitational pull of AI investment cannot be ignored: he estimates that AI-related ventures now account for roughly 50 to 60 percent of total venture capital activity. This disproportionate concentration, he warns, is likely laying the groundwork for a severe market correction in the years ahead.
Even if sectors outside of AI maintain their rational valuation models, the sheer abundance of capital being poured into artificial intelligence will almost certainly lead to a painful period of consolidation. Many startups, lacking genuine differentiation or sustainable demand, may ultimately collapse under the pressure to justify astronomical valuations. In his estimation, we are still in the nascent stages of this unfolding cycle—a phase where early successes appear to validate the promise of the technology even as speculative frenzy continues to inflate expectations. Williams’ final assessment captures this tension succinctly: the AI revolution is working, progress is unmistakable, but beneath its surface lies a turbulent, overheated investment environment where only the most resilient and truly innovative enterprises will endure.
Sourse: https://www.businessinsider.com/ai-boom-huge-winners-wipe-out-overhyped-startups-vc-investor-2025-11
