Early AI Investor Elad Gil Sees Huge Potential in AI-Powered Rollups to Transform Traditional Businesses

Elad Gil has been ahead of the curve on AI investing from the very start. Long before ChatGPT became a household name, Gil was quietly backing pioneers like Perplexity, Character.AI, and Harvey. But now, as the initial wave of AI success stories emerges, the seasoned solo venture capitalist is turning his attention to a fresh, transformative opportunity: leveraging AI to reinvent traditional, labor-intensive businesses through rollups.

The concept is straightforward yet powerful. Gil aims to acquire mature service firms—think law offices or other professional services—and use AI to automate repetitive tasks, boosting efficiency and margins. With improved cash flow, these AI-enhanced companies can then acquire others, scaling rapidly in a cycle that Gil believes could reshape entire industries.

“It just seems so obvious,” Gil told us in a recent Zoom conversation. “Generative AI excels at understanding and manipulating language—whether it’s text, audio, or video—and can automate everything from coding to sales outreach to back-office work.” The key advantage? Owning these businesses outright allows for swift transformation, driving margins from, say, 10% to 40%, a massive leap that creates significant leverage in acquisitions.

Gil has already placed bets on two startups embracing this model, including Enam Co., a productivity-focused firm valued at over $300 million and backed by industry giants like Andreessen Horowitz and OpenAI’s Startup Fund. While details remain private, Gil stresses that AI-driven rollups are fundamentally different from earlier “tech-enabled” rollup attempts, which often just slathered a thin technological veneer on traditional companies without genuine operational change.

Yet, challenges remain—chiefly in assembling the right teams with both technical prowess and private equity experience. Gil notes he’s met dozens of teams but few have cracked the formula. Competition is heating up, with other major investors like Khosla Ventures eyeing this space.

For Gil, this is about more than money. “I love technology, progress, and working with people driving important change,” he said. His hands-on approach, supported by a small team of engineers who test and evaluate AI tools, keeps him deeply connected to emerging trends. This practical involvement helped him anticipate the scale of transformation as early as the launch of GPT-3.

Looking ahead, Gil sees AI markets maturing with clear leaders emerging in fields like legal tech, healthcare, and customer service. His portfolio includes promising companies like Harvey, which builds large language models for legal teams; Abridge, improving clinical documentation in healthcare; and Sierra AI, developing AI agents for customer support.

“The game is far from over,” Gil cautions. “But we’re moving from a broad field of interesting players to a more defined landscape of winners.” Above all, he’s excited by the opportunity to be at the crossroads of two revolutions: the rise of AI itself and its power to reshape entire industries.