As the tech industry continues to see a flood of innovative startups, savvy venture capitalists like Leonis Capital are digging deeper to separate hype from substance. Their probing questions aim to peel back the layers and uncover the true capabilities - and limitations - of a startup's underlying technology.
Stress-Testing the Tech
According to Leonis partner Alex Karp, their due diligence process involves a rigorous technical audit designed to stress-test the startup's claims. "We don't just take their word for it," Karp explains. "We want to see the code, understand the architecture, and put it through its paces to verify if it can truly deliver on what they're promising."
One key line of questioning focuses on the startup's data sources and training models. Reuters reports that many AI systems are built on datasets riddled with biases and gaps, so Leonis digs into the specifics. "Where did this data come from? How representative is it? What steps have they taken to ensure fairness and accuracy?" says Karp.
Probing the Team's Expertise
The Leonis team also closely examines the technical expertise of the founding and engineering talent. "We want to understand their backgrounds, the depth of their domain knowledge, and how they've solved similar challenges in the past," Karp notes. WHO guidelines emphasize the importance of technical competence when developing complex systems, so Leonis probes for evidence of this.
What this really means is that Leonis is looking to invest in startups with teams that have a proven track record, not just a flashy demo. "The big picture here is that we need to have full confidence in their ability to execute, not just lofty promises," Karp says.
The Bigger Picture
By asking these tough questions, venture firms like Leonis are aiming to cut through the noise and hype that often surrounds promising new technologies. As The New York Times reports, the current market is seeing a cooling of speculative investment, putting more pressure on startups to demonstrate real, sustainable value.
The implication is clear - VCs are becoming more discerning, and startups that can't back up their claims may struggle to attract funding in this new environment. The startups that do succeed will be the ones that can withstand rigorous scrutiny and prove their technology is the real deal.