The Role of Artificial Intelligence in Venture Capital: From Gut Feelings to Data-Driven Approaches in Startup Valuation and Decision-Making

Startup valuation is a cornerstone of venture capital (VC), yet it remains deeply uncertain and subjective—especially at early stages, where traditional financial models fall short. This paper provides a structured overview of how Artificial Intelligence (AI), particularly machine learning and large language models (LLMs), is being applied in VC to enhance decision-making. We first review foundational valuation methods (e.g., VC Method, Scorecard, DCF), highlighting their strengths and limitations. We then examine real-world applications of AI in deal sourcing, founder evaluation, success prediction, due diligence automation, portfolio monitoring, and strategic forecasting. Based on academic literature and industry cases, we show that while AI is not replacing human judgment, it is increasingly augmenting it—paving the way for more consistent, scalable, and data-driven investing.