The Full Ratchet (TFR): Venture Capital and Startup Investing Demystified 483. AI Revenue-Model Transformation, Building an AI Moat, and The Arrival of Agents (Medha Agarwal)
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May 19, 2025 Medha Agarwal, a General Partner at Defy and a rising star in venture capital, shares insights on navigating AI-driven revenue model transformations. She discusses the shift from traditional pricing to dynamic models that boost productivity. Medha emphasizes the importance of sector expertise in revolutionizing industries, particularly in healthcare and supply chains. Additionally, she highlights the value of strong founder-investor relationships and strategic talent acquisition for startup success, showcasing how these elements can drive innovation and growth.
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Medha's Entrepreneurial Roots
- Medha Agarwal started as an entrepreneur building two companies before becoming an investor. - These experiences gave her empathy and insights into the challenges founders face in building companies.
AI Expands Vertical Software TAM
- AI enables verticalized software to tap into large labor budgets instead of just software spend. - This shift creates a much bigger total addressable market for AI-driven vertical software companies.
AI Pricing Models Explained
- Four pricing models in AI-driven vertical software: fixed per seat, input-based, output-based, and hybrid models. - Hybrid models combine base fees with usage overages to balance predictability and capturing value.