The venture capital industry built its modern mythology on the power law — a handful of home runs cover every strikeout. But AI is rewriting that math faster than any LP agreement anticipated.
According to Kamran Ansari, founder and managing partner at Kapital Ventures and venture partner at Infinity VC, roughly 10–20% of his portfolio companies are 'very vulnerable right now' — above and beyond the normal venture mortality rate. An early-stage VC who spoke anonymously to Fortune placed the figure at about 10% of their own portfolio specifically imperiled by foundation-model shifts.
The culprit is speed. 'No doubt that AI is changing really fast, and it's changing the half-life of a thesis,' said Eric Archer, cofounder of VC firm Monashees. What passed for a defensible market position in 2023 or 2024 can look like a category error by mid-2026.
Lily Lyman, managing partner at Underscore VC, frames the current landscape in four lanes: soaring AI consensus bets, efficient-growth companies, startups still hunting product-market fit in tough industries, and — most critically — companies caught directly in the crosshairs of OpenAI and Anthropic. 'In that fourth bucket, the market's shifted so much in terms of what's possible with Claude or any of the models, that the startup's fundamental value prop is no longer as valuable as originally thought,' she told Fortune.
Perplexity is the cautionary case study Ansari reaches for. 'Perplexity is one of those funny companies where it was so molten-lava-hot,' he said. 'I don't think it's that special anymore because Google caught up extraordinarily fast.'
Zachary Aarons, cofounder at MetaProp, has been tracking what he calls the 'SaaSpocalypse.' His verdict for every software company is blunt: 'You agentify or die.' Companies that embed agentic capabilities into their own platforms — particularly in mission-critical verticals like construction — retain relevance. Those that don't are running out the clock.
Ansari also referenced a public conversation at Fortune Brainstorm Tech in which private equity executive Robert F. Smith told the audience that a small but real portion of his software companies 'no longer have a right to exist' amid AI-fueled changes.
For founders who recognize themselves in that description, Ansari offered pointed advice: return the capital. 'Why don't I return like 60, 70 cents of your money on the dollar, and when I have something new, I'll come back to you to raise money again,' he said. That outcome, in his words, 'leaves a better taste in your mouth than somebody taking the gas tank to zero.'
The only categories Ansari sees as genuinely insulated are regulated license businesses and companies sitting on proprietary data that is difficult to replicate. 'Absent those two things, everything else feels exposed,' he said.
The CEO Times read: This is what creative destruction looks like at machine speed. Free enterprise has always punished complacency — AI is simply compressing the timeline from years to quarters. The investors and founders who act now, return capital honestly, and pivot toward defensible moats will preserve the trust that makes the next fundraise possible. Those who burn the tank to zero and send the inevitable apology email are not victims of disruption; they are its authors. Capital rewards clear rules and honest accounting. The market has already voted.
