Insight Partners stays diversified as VCs pile into OpenAI and Anthropic

Insight Partners co-head Deven Parekh said the venture market is seeing AI valuations increase at a pace that recalls the 2021 cycle, warning that investors may be paying more without receiving enough new information to justify the additional risk.

Speaking with TechCrunch at its StrictlyVC event, he said the firm sees an opportunity to invest earlier and increase exposure to companies that demonstrate strong performance, rather than relying on increasingly expensive follow-on rounds.

Parekh said Insight has continued to favor diversification even as major venture funds have increased their exposure to OpenAI and Anthropic. He said some funds are targeting allocations of 35% to 40% to one of the two AI companies, but maintained that long-term venture investing has generally benefited from diversified portfolios. Insight has invested in both companies and also continues to invest across early-stage, growth and buyout strategies.

On liquidity, Parekh said Insight has returned more than $20 billion to LPs through strategic sales and IPOs over the past two years, with several billion dollars more expected.

He said secondaries are primarily a mechanism for returning capital and advised founders to consider taking some money off the table when valuations become frothy, arguing that selling a portion of a stake can reduce risk without requiring a complete exit.