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

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

  • Welcome to Venture Legal: Where Capital Meets Legal Innovation

    By Monica Zent | March 5, 2025

    PitchBook reported in January that “One out of every three VC dollars invested globally in 2024 went to an AI startup.” We are at a pivotal moment, as AI continues to transform industries, including the legal sector, regulatory frameworks, and the broader ecosystem for legal tech innovation. Venture capital is playing a key role in driving…