A new venture capital firm, Brainworks Ventures, has announced the launch of its $50 million fund dedicated to supporting "AI-native" startups. Led by a team of industry veterans including DARPA alumnus Dr. Phillip Alvelda, the fund aims to challenge traditional investment models with a more capital-efficient approach. The firm is targeting a first close of $15 million by the first quarter of 2026, with plans to scale the fund to $75 million.
A New Playbook for AI-Native Companies
Brainworks Ventures asserts that the established Silicon Valley playbook for scaling companies is now obsolete. Where cloud-era startups often required $150 million over a decade to reach a major listing, the firm believes AI-native companies can achieve similar outcomes with as little as $6 million in under four years. This exponential shift in capital efficiency forms the core of the fund's investment thesis and its approach to market.
Managing Partner Phillip Alvelda argues that traditional venture capitalists are struggling to adapt to this new reality. He likens their strategy of adding AI to existing portfolio companies to "adding a turbocharger to a horse-drawn carriage," suggesting it cannot compete with companies built on an AI foundation from inception. This highlights the firm's focus on identifying and backing truly disruptive, AI-first founders.
Veteran Team with Decades of AI Expertise
The firm is helmed by a team with deep roots in the artificial intelligence sector, long before its recent surge in popularity. Alongside Alvelda, the leadership includes Volker Hirsch, a former partner at Amadeus Capital Partners, and Louis Rajczi of Forté Ventures and Siemens Venture Capital. Together, they bring over 80 years of combined experience in building, scaling, and investing in technology companies across the globe.
Dr. Alvelda’s track record includes his time as a program director at DARPA, where he transformed $25 million in initial grants into a portfolio of health-tech companies now valued at over $2 billion. His ability to nurture breakthrough technology is further evidenced by testimonials from founders like Dr. Ryad Benoseman of GrAI Matter Labs. Benoseman credits Alvelda’s early belief and support as critical to his company's creation and subsequent success.
Strategic Investments and AI-Powered Operations
The fund will concentrate its investments in key areas poised for AI-driven transformation, including applications, infrastructure, healthcare, and enterprise productivity. With investment sizes ranging from $250,000 to $10 million, Brainworks Ventures plans to support companies across North America, Europe, and the Asia-Pacific region. This global reach is designed to capture the best AI talent wherever it emerges.
In a unique approach, Brainworks Ventures operates as an AI-native entity itself, embedding artificial intelligence into its core functions. The firm utilizes AI to automate and enhance its deal flow sourcing, due diligence processes, and portfolio design. This operational model expands the team's capacity to analyze deals and support its portfolio companies more effectively than many larger, traditional funds.
Redefining Venture Capital Economics
The firm's leadership contends that the economics of venture capital have fundamentally changed in the new AI era. Alvelda stated that an "AI-enhanced $50 million fund can now accomplish what it took a $500 million fund to achieve last year." This is because AI-first founders can build and scale their businesses faster and with significantly less capital, altering the entire risk and return profile for investors.
This new model directly impacts investor returns by ensuring more capital is deployed into portfolio companies rather than being consumed by operational overhead. Combined with the potential for faster exits and more favorable ownership economics, the firm aims to deliver superior returns even at more modest exit valuations. Brainworks believes traditional VCs who fail to adapt to this new math will ultimately be left behind.
The launch of Brainworks Ventures signals a significant shift in the venture capital landscape, championing a new, capital-efficient model tailored for the AI revolution. By combining a veteran team's deep expertise with an AI-powered operational backbone, the firm is positioned to identify and scale the next generation of transformative companies. Its approach challenges the status quo and offers a new blueprint for investing in global innovation.