Benchmark describes how AI is straining investor exclusivity

The growth of AI companies is putting pressure on an informal venture capital rule: avoid funding direct competitors. In an article published on October 16, TechCrunch reports remarks made by Benchmark partners earlier in the week at Disrupt. They describe conflicts that are becoming harder to avoid as companies rapidly change the scope of their activities.

Eric Vishria says Benchmark remains committed to each founder and keeps the information it receives confidential. He also maintains the importance of exclusivity at the early stages. Chetan Puttagunta, for his part, distinguishes between investing in a direct competitor from the outset and a situation in which a portfolio company later expands into another’s market.

According to Puttagunta, AI intensifies this dynamic by encouraging founders to target more markets. His assessment of the cost of creating software, however, is an investor’s argument, rather than an economic finding demonstrated in the article.

Peter Fenton puts transparency at the center of the response: a founder should not discover the conflict after the fact or feel that they are receiving less support. The analysis emerging from these statements therefore concerns governance as much as capital allocation. If business activities converge after investment, the quality of information and the management of commitments become decisive. These remarks describe Benchmark’s position; they do not establish the existence of a new rule shared across the industry.