THE CONUNDRUM OF AI DISPLACEMENT

Long-time NYA Member Murat Köprülü addresses how many of the traditional methods that angel investors have relied on to evaluate investments no longer hold. Today, the one of the main challenge startups face is the risk of AI displacement.  Murat discusses how every startup must be examined through that lens and offers five criteria for evaluating investments in today's world.

As you all know, the pace of AI advancement is accelerating rapidly. What systems could do 12 months ago has already improved by orders of magnitude, and by early 2027, the leap could be even more dramatic. This level of exponential change is difficult for anyone to fully grasp, even for those deeply embedded in the field.

In this environment, many of the traditional methods we’ve relied on to evaluate investments no longer hold. The frameworks that worked before may not be sufficient for what’s coming next.

I’ve historically used a checklist of 12 red flags when evaluating angel investments. That framework was built for a different world. It needs to evolve.

Today, the central challenge is AI displacement risk. Every startup we evaluate must be examined through that lens.

To identify truly durable opportunities, we may need to rethink our criteria:

1. Resilience to replication
   Is the product defensible against cloning, reverse engineering, or being outbuilt by AI-assisted development?

2. Mission-critical value
   Would customers struggle to function without this solution, or is it ultimately replaceable?

3. Depth of moat
   Is the advantage so significant that competitors cannot realistically catch up? How do we measure that depth in an AI-driven world?

4. Founder adaptability
   Are the founders capable of continuously evolving the product in response to rapid technological change?

5. Antifragility
   Borrowing from Nassim Taleb, does the company strengthen under volatility, disruption, and rapid change?

This leads to a broader question: what makes a company “AI-indisputable”? What characteristics signal that it can withstand or even benefit from the accelerating pace of AI?

One anecdote highlights the challenge. A highly capable AI engineer recently shared:

“Every six months, a new AI breakthrough forces us to rethink everything. We reset our product, strategy, and roadmap constantly. Progress is accelerating, but it’s also exhausting.”

That tension captures the moment we’re in.