Insight Partners managing director Deven Parekh says venture valuations are rising at a pace reminiscent of 2021, prompting the $90 billion investment firm to favor earlier-stage bets, diversification and disciplined liquidity over increasingly concentrated wagers on a handful of AI companies. Insight owns stakes in both OpenAI and Anthropic, but Parekh said the firm does not intend to build its strategy around either company.
Speaking at TechCrunch’s StrictlyVC event in New York, Parekh said follow-on rounds are increasingly happening before companies generate enough new operating data to justify substantially higher valuations. Investors are therefore paying more without receiving the corresponding reduction in risk that usually comes with a later financing round.
Insight Is Going Earlier and Doubling Down Later
Parekh said Insight’s response has been to make smaller initial investments and increase its position when companies demonstrate stronger results. A large fund can absorb a $20 million to $25 million early-stage investment that fails while retaining enough capital to invest substantially more when a company succeeds.
He pointed to Wiz as an example, saying Insight invested at Series A and continued participating in later rounds as the cybersecurity company expanded. Parekh said this approach has generated a disproportionate share of the firm’s returns compared with placing much larger amounts into companies from the outset.
Insight has applied the same diversified approach to frontier AI. The firm holds positions in both OpenAI and Anthropic, which Parekh said is more practical at later stages when an investor is not joining the board or influencing governance.
That would be much harder at Series A or Series B, where Insight generally avoids investing in direct competitors and maintains information-sharing restrictions. Parekh said OpenAI initially appeared strongest in consumer AI while Anthropic had a clearer enterprise position, although those distinctions are already changing.
He also pushed back against the growing practice of concentrating entire venture funds around the two companies. Parekh said he knows of funds currently being raised with plans to put 35% to 40% of their capital into either OpenAI or Anthropic, while Insight continues to view diversification as more reliable across multiple fund cycles.
Parekh Prioritizes Returning Cash to Investors
Liquidity is another area where Parekh believes venture firms need greater discipline. Insight has returned more than $20 billion to limited partners over the past two years through IPOs and strategic sales, with several billion dollars more expected, he said.
Parekh argued that managers should consider selling part of highly appreciated holdings even when they believe those investments could continue rising. Returning the original investment while retaining additional shares can reduce risk and demonstrate that paper gains can be converted into cash.
He gave similar advice for founders facing acquisition offers or secondary opportunities at unusually high valuations. Rather than assuming prices will continue rising indefinitely, Parekh said founders can sell a portion of their holdings while maintaining exposure to future growth.
Parekh expects more large AI companies to reach public markets over the next 18 months, with Anthropic and OpenAI among the most closely watched candidates. But he said their extraordinary growth rates should not become the benchmark for every technology company, because even the fastest-growing businesses eventually move toward more conventional rates of expansion.
Featured image credits: Wikimedia Commons
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