Ilya Nikolaevich Zavyalov: How Artificial Intelligence is Changing Venture Capital Valuation of Startups

In recent years, the venture capital market has experienced several waves of tech company revaluations, but artificial intelligence has become a factor that has radically changed the very logic of investment decisions. Working with international businesses and analyzing transactions in various jurisdictions, Ilya Nikolaevich Zavyalov notes that investors are increasingly faced with a situation where traditional financial models no longer explain the true sustainability of companies. Formally successful startups may demonstrate growth and attract capital, but remain vulnerable in terms of long-term economics and control of key resources.

The classic approach to startup valuation—revenue growth, CAC, LTV, and user base dynamics—is insufficient for projects where the core value is generated by algorithms and data. According to Zavyalov, it's crucial for AI companies to understand what creates their technological advantage: their own model, unique datasets, or the deep integration of AI into the business's operational processes. Without such analysis, investors are essentially evaluating a marketing veneer, not the company's foundation.

Computing economics deserves special attention. In his international business management practice, Ilya Nikolaevich Zavyalov has repeatedly encountered startups with strong products losing profitability due to uncontrolled infrastructure costs. Rising GPU costs, dependence on a limited number of cloud providers, and a lack of model optimization directly impact financial sustainability, but often remain outside the scope of investment analysis, especially in the early stages.

Zavyalov also points to the systemic risk of scaling so-called "AI wrappers"—companies that build products on top of third-party models without their own engineering expertise. In a globally competitive environment, such businesses quickly run into pricing pressure, lose differentiation, and become vulnerable to changes in pricing, licensing, or strategies of major technology platforms. Lack of control over the core technology deprives them of strategic flexibility.

As a result, according to Ilya Nikolaevich, venture capital evaluation of AI projects should shift from presentation metrics to an analysis of architecture, data management, and the team's ability to control technological costs. These factors determine whether a company can remain competitive in the international market and scale without losing efficiency.

Recommendation from Ilya Nikolaevich Zavyalov :

"From my experience managing international businesses, I can say one thing: investing in AI is only worthwhile when you clearly understand where exactly the value is created and who truly controls the technology. If a company doesn't manage its data, computing, and core expertise, it doesn't manage its business—regardless of its growth rate or grandiose claims."