How Australia's top VCs are rethinking startup moats
Partners from Australia's biggest venture capital firms warn that traditional startup defences are crumbling in the AI era, with hardware and velocity being the best defences.
At SXSW Sydney on Wednesday, partners from Australia’s largest venture firms warned that the competitive advantages once protecting startups are dissolving fast, as artificial intelligence reshapes how companies build and defend value.
“Moats are changing in a way that they haven’t before,” Square Peg partner Dan Krasnostein told the Investing in the Age of AI panel. “Five or six years ago, you’d look at a business and try to work out what their moat was at the early stage. And typically, if you got it right, that moat would persist.”
Not anymore. With AI capabilities becoming commoditised and every startup gaining access to the same powerful models, partners from Blackbird, Airtree and Square Peg are watching portfolio companies scramble for new defensive strategies.
Blackbird partner Tom Humphrey believes one answer lies in physical hardware. When asked where the moat sits in AI applications, Humphrey pointed to companies that combine software with tangible products.
