The AI services transformation may be harder than VCs think

image via TechCrunch

September 29, 2025, 1:20 AM

• •VCs are leveraging AI to automate services businesses, aiming for higher margins.
• •General Catalyst is investing $1.5 billion in this 'creation' strategy across multiple industries.
• •Studies reveal 'workslop,' AI-generated work that may increase employee workload.
• •Despite challenges, VCs remain optimistic, believing AI's complexity supports their approach.

Venture capitalists are investing heavily in AI to automate tasks within traditionally labor-intensive services businesses, aiming to achieve software-like margins. General Catalyst leads this trend, dedicating a significant portion of its fund to acquire and transform companies across various sectors, aiming to improve cash flow and facilitate further acquisitions. However, a recent study indicates that AI-generated work, dubbed "workslop," may be creating more work for employees. Despite potential challenges, firms like General Catalyst are optimistic, believing that the difficulty of applying AI validates their approach.

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