UpWest, a US-based VC focused on Israeli founders, reports increasing use of AI in its investment process, according to founding partner Gil Ben-Artzy.

AI is now used for due diligence research, competitive landscape mapping, and portfolio support.

Key investment decisions remain driven by human judgment and in-person meetings.

UpWest’s portfolio largely features companies built around vertical AI applications in sectors like security, healthcare, legal, and infrastructure.

The firm backed SentinelOne, a cybersecurity company using AI, as an early investor.

While AI-specific metrics like user engagement are important, the firm values a team’s domain insight and ability to solve urgent problems.

🔗 Source: Calcalist

🧠 Food for thought

1️⃣ AI venture funding has shifted toward fewer but larger investments

The evolution of AI startup funding reflects a maturing market that prioritizes quality over quantity, similar to UpWest’s emphasis on defensibility and real usage metrics.

In 2018, AI venture funding reached $9.33 billion across 466 deals, compared to 533 deals the previous year, demonstrating that while deal volume decreased, average deal sizes increased significantly 1.

This 72% funding increase despite fewer transactions suggests investors became more selective, focusing on companies with stronger fundamentals rather than chasing every AI opportunity 1.

This selectivity becomes particularly important given UpWest’s observation that “the bigger financial risk in early AI companies isn’t infrastructure or regulation, it’s when the technology gets ahead of the business model.”

2️⃣ Human judgment remains central to early-stage investing despite AI operational adoption

UpWest’s experience demonstrates how AI tools can enhance but not replace core investment decision-making, even as the firm rates AI’s operational impact as 7 out of 10.

The firm uses AI extensively for due diligence research, competitive mapping, and portfolio support, yet emphasizes that “the most important work we do is still human and in-person: sitting across from founders, seeing how they think on their feet.”