How AI FOMO is Fueling VC Competition

June 18, 2025 / Monica Zent
Venture Legal 8

When Tim Cook said more than a decade ago that competition makes everyone better, he probably did not imagine how relevant those words would be to the rise of artificial intelligence in venture capital. The Original Copy investment race has created an environment where speed and precision matter more than ever. Similar patterns are also visible in the legal tech sector, where adopting advanced tools has become a necessity rather than a choice for any serious legal services provider.

According to recent reporting from PitchBook, record levels of dealmaking are being driven by the fear of missing out on AI opportunities. This shift not only influences traditional VC firms but also affects investors who are backing ALSP and other companies at the intersection of law and technology. In such a competitive climate, the question is less about whether to use AI and more about how to use it in ways that create long-term differentiation.

In this edition of Venture Legal, I explore some of the strategies firms are using to adapt, including:

  • Taking a vertically specialized approach that highlights niche expertise
  • Strengthening startup support with tailored resources and legal support services
  • Developing clear communication strategies that build credibility and trust

Follow Monica on Substack and subscribe to read the featured story:

Venture Legal, Ed. 8: How AI FOMO is Fueling VC Competition

  • As America Celebrates its 250th, DefenseTech & GovTech Take Center Stage

    By Monica Zent | July 10, 2026

    As America celebrated its 250th birthday, headlines reported on an investment “boom” in startups focusing on national security. 🎆 Ahead of the July 4th holiday weekend, Fortune reported on the “defense tech boom,” noting that VCs had deployed a record $19.8 billion into the sector across 262 deals in the first quarter of 2026, according…

  • Mid-Year LegalTech Highlights: Big funding rounds, M&A activity, Leadership changes + Looking ahead

    By Monica Zent | June 25, 2026

    Influencers, celebrities, pro sports, film premieres, parties and cash to burn. A reality TV series? No (although I’ve been tempted to write one inspired by this sector). It’s LegalTech! Having been a first-gen LegalTech founder, developing early innovations such as AI chatbots and collaboration and clause repositories back in the 2010s, I vividly recall the…

  • LegalTech’s “Open Source” Moment!

    By Monica Zent | June 4, 2026

    With AI usage for legal approaching “near-universal” adoption, the sector continues to evolve at an astounding pace. Directly on the heels of the debut of Anthropic’s “Claude for Legal,” which it debuted just shortly before filing for IPO this week, The Information reported last week on a “fresh assault” on LegalTech’s major players: “Some law…