The Venture Bet
Replacing Humanity with AI
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🤖 TL;DR: Venture capital is no longer betting on human potential - it’s betting on human replaceability.
Over $100Bn was poured into AI in 2024 alone, not to augment workers, but to eliminate them.From agentic AI to workforce surveillance to Service-as-a-Software models, the new VC thesis is clear: automate entire job categories, concentrate value in the hands of the few, and reshape the global economy on the logic of efficiency over employment.
This is not a distant future - it’s already happening. If you work, lead, hire, or build - you need to understand the machine that’s being built to replace you.
The venture capital landscape has undergone a seismic shift in recent years, with an unprecedented concentration of investment flowing into technologies designed to automate, replace, or fundamentally transform human work.
While the rhetoric often speaks of "augmentation" and "human-AI collaboration," the investment patterns reveal a different truth: venture capitalists are systematically betting on a future where workers become increasingly replaceable.
This shift represents one of the most significant capital allocation trends of our time, with profound implications for the future of work itself.
The Numbers Don't Lie: A Capital Tsunami Toward Automation
The scale of venture capital investment in workforce replacement technologies is staggering.
In 2024, AI companies secured over $100 billion in global venture capital funding, representing nearly 33% of all global venture funding and marking an 80% increase from $55.6 billion in 2023.
This represents the highest funding year for the AI sector in the past decade, surpassing even the peak global funding levels seen during the 2021 venture boom.
The concentration is even more pronounced when examining deal flow.
AI startups received 53% of all global venture capital dollars invested in the first half of 2025, with that percentage jumping to 64% in the U.S. alone.
This isn't just about funding amount - it's about deal prevalence: AI startups comprise 29% of all global startups funded, and nearly 36% in the U.S.
Perhaps most telling is the infrastructure being built around this thesis.
By my estimate, based on Pitchbook data, there were 727 AI-related stocks to choose from globally as of mid-2024.
Now compare that to private markets, where there are some 24,500 such companies backed by funds – a 33x differential.
This massive differential suggests that the private markets are far ahead of public markets in recognising - and betting on - the transformative potential of workplace automation.
Source : Wharton Business School.
The Fundamental Shift in Investment Thesis
Traditional venture capital has long focused on efficiency gains and market expansion.
The current wave represents something fundamentally different: a bet that entire categories of human work can be eliminated rather than merely improved.
This shift is evident in the language and metrics used by both investors and startups.
The AI Agents market is projected to grow from $5.1 billion in 2024 to $47.1 billion by 2030, representing a CAGR of 44.8%.
But these aren't just productivity tools - they're designed as direct replacements for human workers. VCs aren't just excited – they're recalibrating their entire investment thesis around agentic AI, with one analysis noting that the pie for software businesses has just grown dramatically, and smart money is betting that agentic AI will create more unicorns than mobile or cloud computing did.
The investment focus has shifted from augmentation to replacement.
The biggest opportunities will exist where the unit economics of hiring AI are 100x better than the unit economics of hiring or subcontracting a person to do the job.
This isn't about making humans more productive - it's about making humans unnecessary.
The Mechanics of Replacement: How VCs Are Targeting Human Labour
Venture capital firms are not investing randomly in automation; they're following a systematic approach to identify and target human labor for replacement. The strategy involves several key elements:
Targeting High-Volume, High-Cost Labor Markets
Besiroglu even calculated Mechanize's total addressable market by aggregating all the wages humans are currently paid.
"The market potential here is absurdly large: workers in the US are paid around $18 trillion per year in aggregate. For the entire world, the number is over three times greater, around $60 trillion per year".
This framing reveals the venture capital mindset: human wages are not a social good to be preserved but a market inefficiency to be captured.
VCs are specifically targeting what they call "operations-heavy companies" and SMBs that have traditionally scaled linearly with labour.
These AI companies should open additional pathways to scale for these businesses, which have traditionally scaled linearly with labor, and are constrained by their ability to add new employees.
Now they'll be able to increase their workforce at the click of a button.
The Service-as-a-Software Model
A new business model is emerging that VCs are aggressively funding: Service-as-a-Software (SaaS).
Initially, many of these Service-as-a-Software companies will just look like automation.
You might automate away 99 percent of the daily "admin" tasks.
For labour and software to truly become one market, some companies will need to go beyond this.
This model represents a fundamental shift from selling tools to selling outcomes.
Instead of selling software that helps humans work better, these companies are selling the work itself - performed by AI.
The venture capital community is betting heavily on this transition, with large incumbents with high turnover, low-margin businesses driven by big human workforces being primary targets.
Systematic Targeting of Specific Professions
VCs are not just making broad bets on automation - they're systematically targeting specific professions for replacement.
Victor Lazarte, general partner at venture capital firm Benchmark, has been explicit about this, stating that
"Big companies talk about, like, 'AI isn't replacing people, it's augmenting them.'
It's bulls---t. It's fully replacing people".
Lazarte specifically identified two professions as prime targets: lawyers and recruiters.
He explained that within the next three years, AI will be able to take over the busy work in law, which often falls to recent law school graduates.
On the recruiting side, Lazarte predicted that AI would take over interviewing candidates.
The venture capital community is backing this thesis with significant capital.
OptimHire, an AI recruiting startup that finds candidates, conducts interviews, and schedules calls, raised $5 million in seed funding last month.
Another small AI recruiting startup, ConverzAI, raised $16 million in a Series A round in January to create virtual recruiters.
The Surveillance Economy: Funding Control Before Replacement
Before workers can be replaced, they must be understood, measured, and controlled. VCs are systematically funding the infrastructure needed to surveil and analyse human work patterns, creating the data foundation necessary for eventual replacement.
Startups are deploying employee tracking tools in low-regulation markets with help from Silicon Valley venture capital.
This surveillance infrastructure isn't just about monitoring - it's about creating the behavioural data necessary to replicate human work patterns in AI systems.
The scope of this surveillance investment is comprehensive.
Audits of more than 150 startups and regional companies based in Kenya, Nigeria, Colombia, Brazil, Mexico, and India showed workplace surveillance is expanding in scale and sophistication.
VCs are funding platforms that automate HR functions, such as hiring shortlists, performance reviews, attrition forecasting, and also unionisation-risk scoring.
This infrastructure serves a dual purpose: immediate control and future replacement.
Workers say they feel a loss of autonomy when they are managed by an algorithm rather than a human, but this algorithmic management is also creating the behavioural patterns and performance metrics that will eventually be used to justify full automation.
The Corporate Adoption Accelerator
The venture capital bet on workforce replacement is being validated by rapid corporate adoption.
The percentage of organisations using AI in at least one business function jumped from 55% in 2023 to 78% in 2024.
This isn't just experimentation - it's systematic integration with the explicit goal of reducing human labor costs.
Corporate spending patterns reveal the true intent.
IT budgets are shifting decisively toward growth and innovation, with one in three companies globally planning to invest more than $25 million in AI in 2025.
Some sectors are especially bullish: retailers expect a 52% jump in AI spending beyond the bounds of traditional IT, while 82% of manufacturers say they'll boost their AI budgets over the next 12-18 months.
The results are already visible.
In 2024, US software company Salesforce fired 700 workers – equivalent to approximately 1% of its global workforce.
This is in addition to similar cuts that saw the company reduce its personnel by 10% last year.
While companies don't explicitly link these layoffs to AI, with Salesforce's hiring budget decreasing as it pumps more money into artificial intelligence, some argue that it's likely that many of these vacancies will be filled by automated labor.
The Concentration of Power: Who Benefits from Replaceability
The venture capital bet on workforce replacement is not just about efficiency - it's about the concentration of economic power.
When human labour becomes replaceable, the benefits accrue primarily to capital holders rather than workers.
Soon, huge businesses will be run by just three (or perhaps fewer) people.
These AI colleagues/vendors are a large part of this transition.
This represents a fundamental shift in the distribution of economic value.
Instead of businesses employing hundreds or thousands of workers, they'll employ a handful of owners and operators, with AI systems handling the rest.
The venture capital community understands this concentration effect.
This might be true for whoever owns the agents.
That is, if employers pay for them instead of developing them in-house.
The economic benefits of automation flow to those who own the technology, not to those who are replaced by it.
The Feedback Loop: How VCs Are Using AI to Invest in AI
In a particularly revealing development, venture capital firms are using AI tools to identify and invest in AI companies that will replace human workers.
AI has become essential to how modern venture capital firms run their businesses - the number of data-driven firms jumped 20% from 2023 to 2024.
Key use cases for AI in venture capital include data entry automation, startup evaluation and due diligence, portfolio management, and deal negotiation.
VCs are using AI to automate their own processes while simultaneously investing in companies that will automate other people's jobs.
This creates a self-reinforcing cycle.
Some investors, like Goenka, say it's not impossible to imagine a future where an entire deal - from sourcing to decision-making to even the founder accepting the offer - is fully automated.
The venture capital industry is betting on automation while simultaneously automating itself.
The Scale of Transformation: Beyond Individual Jobs
The venture capital bet on workforce replacement extends far beyond individual job categories.
It represents a systematic transformation of how economic value is created and distributed in modern economies.
The global warehouse and distribution centre automation market represents a >$40 billion opportunity growing at a 10-15% CAGR.
This isn't just about making warehouses more efficient - it's about fundamentally changing the relationship between capital and labour in one of the economy's largest employment sectors.
The transformation is happening across multiple dimensions simultaneously.
We are training vision-language-action (VLA) models across different embodiments to automate valuable labor starting with palletisation, sorting, picking, and packing.
These aren't isolated innovations - they're part of a coordinated effort to replace human labor across entire industries.
The Psychological Dimension: Making Replacement Palatable
VCs and the companies they fund have developed sophisticated strategies to make workforce replacement psychologically palatable to both workers and society.
The language used is carefully crafted to obscure the ultimate goal.
The companies that will complete the fusion process will have a degree of "humanness."
This is because truly good service isn't just efficient.
It's delightful.
This framing suggests that AI replacement will actually improve service quality, making the elimination of human jobs seem like a benefit rather than a loss.
The venture capital community promotes this narrative through optimistic projections.
Completely automating labour could generate vast abundance, much higher standards of living, and new goods and services that we can't even imagine today.
However, this optimistic outlook overlooks a basic fact: If humans don't have jobs, they won't have the income to purchase all the things the AI agents are producing.
The Acceleration Phase: Why Now?
The timing of this massive venture capital bet on workforce replacement is not coincidental.
Several factors have converged to make this moment particularly attractive for investors.
First, the cost of AI technology has plummeted.
The price per floating-point operation per second (FLOP/s) – a measure of computational power per dollar – on industry-standard Nvidia GPUs fell by over 75% between 2022 and 2024.
Similarly, Stanford estimates that the cost to run a model performing at OpenAI's GPT-3.5 level dropped over 280-fold between November 2022 and October 2024 alone.
This cost reduction makes workforce replacement economically viable at scale.
The same budget now buys significantly more computational power, making the technology commercially viable.
Second, the business model infrastructure has matured.
Today's foundation models already possess enough intelligence to automate most of the tasks required to run a profitable software business.
This means VCs are no longer betting on future capabilities - they're betting on current ones.
The Institutional Response: How VCs Are Shaping Policy
The venture capital community is not just investing in workforce replacement - it's actively shaping the policy environment to enable it.
This includes funding research institutions, think tanks, and policy organisations that promote automation-friendly policies.
The approach is systematic and long-term.
VCs understand that successful workforce replacement requires not just technological capability but also social and political acceptance.
By funding the intellectual infrastructure that shapes public opinion about automation, they're creating the conditions for their investments to succeed.
This institutional capture extends to regulatory frameworks.
The "Little Tech" ecosystem is under-regulated and largely funded by venture capital, creating opportunities for rapid deployment of workforce replacement technologies without significant regulatory oversight.
The Global Dimension: Exporting Replaceability
The venture capital bet on workforce replacement isn't limited to developed economies.
VCs are systematically exporting these technologies to developing countries, where regulatory oversight is often weaker and labour costs are lower.
Technologies that promise to track, manage, and supervise workers, increasingly using artificial intelligence, are getting entrenched in the developing world.
This global expansion serves multiple purposes: it provides testing grounds for replacement technologies, creates global markets for automation tools, and establishes precedents for workforce replacement that can later be applied in developed countries.
The global nature of this transformation means that workers in all countries are potentially affected.
For advanced economies, the share of the workforce that may need to learn new skills and find work in new occupations is much higher: up to one-third of the 2030 workforce in the United States and Germany, and nearly half in Japan.
The Structural Implications: What This Means for Society
The venture capital bet on workforce replacement has implications that extend far beyond individual job losses.
It represents a fundamental restructuring of how economic value is created and distributed in modern societies.
History shows us that societies across the globe, when faced with monumental challenges, often rise to the occasion for the well-being of their citizens.
Yet over the past few decades, investments and policies to support the workforce have eroded.
The timing of this erosion coincides with the venture capital push toward automation, suggesting a coordinated approach to weakening worker protections while strengthening capital's position.
The concentration of economic power that results from workforce replacement creates new forms of inequality.
We will all need creative visions for how our lives are organised and valued in the future, in a world where the role and meaning of work start to shift.
However, these "creative visions" are likely to be shaped by those who own the replacement technologies rather than by those who are being replaced.
Conclusion: The Inevitability Engine
The venture capital bet on workforce replacement has created what appears to be an inevitability engine - a self-reinforcing system that makes automation seem both natural and unavoidable.
Through massive capital deployment, corporate adoption pressure, policy influence, and narrative control, VCs have constructed a reality where human replaceability appears to be an economic necessity rather than a choice.
This transformation is not happening by accident or as a natural evolution of technology.
It represents a deliberate capital allocation strategy designed to restructure the relationship between labour and capital in favour of capital holders.
The $100+ billion in AI funding represents more than just investment - it's a coordinated bet that human work can be systematically eliminated and replaced with technology owned by investors.
The implications for workers, communities, and society are profound.
As venture capital continues to fund the infrastructure of replacement, the question is no longer whether significant portions of the workforce will become replaceable, but how quickly this transformation will occur and who will benefit from it.
Understanding this dynamic is crucial for anyone seeking to navigate the future of work.
The venture capital community has made their bet clear: they're betting on you being replaceable.
The question now is how society will respond to this challenge and whether alternative models of technological development and economic organisation are possible.
The transformation is already underway, funded by the world's most sophisticated capital allocation system and implemented by some of the most talented technologists of our time.
The bet has been made, the infrastructure is being built, and the future of work is being reshaped according to the logic of capital rather than the needs of workers.
Whether this transformation ultimately benefits humanity or merely concentrates wealth among capital holders remains to be seen.
Source : AARP.
References
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VC Cafe. "The AI Services Revolution: Why VCs Are Betting Big on Agentic AI." November 9, 2024. https://www.vccafe.com/2024/11/09/the-ai-services-revolution-why-vcs-are-betting-big-on-agentic-ai/
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✍️ Why I Wrote This
I’m endlessly fascinated by startups and the emotional rollercoaster that begins the moment a founder has that epiphany - the “aha!” moment 💡 where a problem grips them so tightly they feel compelled to solve it.
As a recovering Founder and Co-Founder myself - and someone who now supports startup founders and leadership teams across the globe 🌍 - I’ve seen something intriguing: the way a person approaches decision-making, risk, and intuition often varies dramatically depending on their age, experience, or both.
This topic is continually in the news, so I thought it relevant to write an article about it and put some evidence and facts behind what is playing out. It triggers the famous quotes “Only the Paranoid, Survive” from Andy Grove, Former CEO of Intel, and "It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change." from Charles Darwin.
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Wow! Another masterpiece -- one that could (should?) be a book! This is certainly THE monumental question of our time. Great job!