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:
Resilience to replication
Is the product defensible against cloning, reverse engineering, or being outbuilt by AI-assisted development?Mission-critical value
Would customers struggle to function without this solution, or is it ultimately replaceable?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?Founder adaptability
Are the founders capable of continuously evolving the product in response to rapid technological change?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.
In 2024, NYA Members’s $10 million investment was spread across 286 individual investments in 37 rounds, supporting 34 companies. The average round size was $270,000 with an average check size of $35,000, underscoring the group’s focus on providing meaningful support to promising startups.
The investments balanced a mix of new and follow-on deals, ensuring that both fresh ideas and existing portfolio companies received the support needed to thrive.
The Rise of the SAFE Note
One of the most notable trends shaping NYA’s investment strategy in 2024 was the increased use of SAFE (Simple Agreement for Future Equity) notes, which now account for 20% of the group’s total investments. This reflects a growing shift in how angel investors structure their deals andaligns NYA’s approach with broader market trends.
According to PitchBook, SAFEs accounted for over 30% of seed-stage deals in 2024. While NYA’s 20% share of SAFE investments is slightly below the national average, it highlights the group’s willingness to embrace deal structures that provide flexibility for founders, even though the terms of a SAFE may not be as “investor friendly”.
Geographical Diversity Fuels Growth
NYA’s investment portfolio in 2024 was geographically diverse, reflecting NYA’s strategy that sources the most exciting companies from a variety of ecosystems.
The majority of the investments were focused in the Northeast, where $7.3 million was deployed.
Other notable regions included:
West Coast: $0.7 million
Central U.S.: $0.6 million
Southern U.S.: $0.1 million
International: $1.2 million
The 2024 numbers represent a return to a focus on NYA’s “home” territory, after a more geographically diverse 2023 (Read more here). Any additional commentary on why the shift happened might be helpful. I believe NYA Members as a group did participate in more pitch events in the NE in 2024 – potentially a reason?
Strong Momentum in Early 2025
The momentum from 2024 has carried over into 2025. NYA has already made 41 individual investments in five rounds, supporting five companies – three of which are new additions to the portfolio, while two are follow-on rounds. This early activity suggests that 2025 is on track to be another impactful year for the group.
Why Entrepreneurs Choose NYA
Entrepreneurs looking for strategic investors are increasingly turning to NYA due to its reputation for providing not just capital but also mentorship, connections, and industry expertise. The group's members, many of whom are seasoned entrepreneurs and industry leaders, actively contribute their knowledge and networks to help portfolio companies succeed. If you are a founder who is seeking an investment partner, please visit our website to learn more.
Looking Ahead
As NYA continues to build on the success of 2024, the group is poised to maintain its position as a leading force in angel investing. With a proven track record of identifying high-potential startups and delivering strong returns, New York Angels remain a powerful catalyst for innovation and growth. NYA is always looking for members to join our dynamic and highly motivated group. If you are an accredited investor interested in angel investing or with existing early-stage investment experience, get in touch with NYA via our website.
