Even Benchmark thinks AI is eroding the venture pact against backing rivals

Benchmark, one of Silicon Valley’s most prominent venture capital firms, has acknowledged that the traditional industry practice of avoiding investments in direct competitors is becoming increasingly difficult to maintain. Historically, venture firms have adhered to an unwritten pact to refrain from backing rival startups to avoid conflicts of interest and maintain founder trust. However, the rapid proliferation of artificial intelligence companies has disrupted this standard. Because AI technology is being applied across nearly every sector, the lines between direct competitors and distinct market players have blurred significantly. Benchmark partners suggest that the sheer volume of AI innovation and the necessity for firms to capture value in this high-growth sector are forcing a re-evaluation of these long-standing norms. As the AI landscape continues to evolve at breakneck speed, investors are finding it harder to navigate the ethical and strategic complexities of portfolio management without occasionally overlapping in competitive spaces.