Elad Gil, one of AI’s earliest and most successful investors, is once again positioning himself ahead of the curve by betting on a novel strategy: AI-powered roll-ups. Long before the world embraced artificial intelligence with the widespread interest in ChatGPT, Gil had already backed emerging AI startups such as Perplexity, Character.AI, and Harvey. Now, after clearly identifying some early frontrunners in the AI landscape, his attention has shifted toward leveraging AI technology to transform traditional, service-heavy businesses.
The strategy involves acquiring mature, labor-intensive companies—such as law firms and other professional services providers—and introducing AI tools to significantly streamline operations, increase efficiency, and improve profitability. The enhanced margins then allow these companies to pursue further acquisitions, fueling a cycle of expansion and AI-driven optimization.
Gil has been actively exploring this concept for approximately three years, describing the potential as “obvious” given the remarkable capabilities that generative AI has demonstrated across language processing, text manipulation, audio, video, code generation, sales activities, and various back-office functions. Converting repetitive human tasks into automated software processes, Gil argues, substantially boosts profitability and reshapes core business models.
Owning these businesses outright rather than merely selling software platforms is crucial, Gil stressed, because the direct ownership allows firms to accelerate AI integrations far faster. When businesses improve their gross margins by substantial amounts—say from a standard 10% to upwards of 40%—they stand uniquely positioned in the market, capable of paying premium prices to acquire additional firms, thanks to enhanced cash flow.
Gil has already begun investing in startups experimenting with this approach, although specifics remain confidential. One venture, Enam Co., has attracted interest from high-profile backers, including Andreessen Horowitz and OpenAI’s investment arm, achieving a valuation in excess of $300 million within just one year. The firm’s focus is on improving worker productivity through AI.
This method of enterprise consolidation differs markedly from previous technology-driven acquisition sprees. Historically, “tech-enabled roll-ups” frequently appeared superficial, applying only a surface-level technological sheen to boost valuations without fundamentally altering operations. In contrast, Gil believes AI’s technological sophistication offers the genuine possibility to revolutionize operational costs and structures.
Success, however, demands uniquely qualified teams—a mix of top-tier technology experience matched with deep expertise in private equity-style acquisitions, a rare blend that Gil acknowledges is challenging to assemble. Although he has evaluated dozens of potential management teams pursuing this strategy, Gil admits most have lacked clarity or cohesion.
Despite competitive interest growing within Silicon Valley—with reputed firms like Khosla Ventures also beginning to experiment in this space—Gil remains confident, focused not merely on financial results, but out of a genuine passion for AI innovation. Enthusiastically involved for years with hands-on experimentation, Gil and his team frequently test new AI tools directly, assessing front-end applications, scripting custom solutions, and analyzing real-world performance.
While conditions in the AI investment market have long been uncertain, recent months have crystallized clearer paths to success in certain sectors, according to Gil. Vertical ecosystems such as legal, healthcare, and customer service now show identifiable frontrunners. Among Gil’s current bets is Harvey, an AI legal platform reportedly exploring funding at a $5 billion valuation; Abridge, a healthcare documentation provider that raised a $250 million Series D round co-led by Gil earlier this year; and Sierra AI, co-founded by noted tech executive Bret Taylor, aimed at automating customer service tasks, valued in the billions from inception.
Despite his optimism over clearer market leaders emerging, Gil cautiously emphasizes the ongoing nature of AI’s evolution, pointing out that the field still holds uncertainties and plenty of areas ripe for competition and innovation.
Ultimately, what excites Gil most about this new phase in AI investment is the significant and lasting real-world transformations intended through these roll-up strategies, facilitating fundamental reinvention across established industries and creating compelling new opportunities for visionary teams and investors alike.
