Insight Partners Rejects OpenAI and Anthropic Concentration With Diversified AI Strategy
Insight Partners’ Devin Parekh explains why the $90 billion firm favors diversified AI bets, earlier checks, liquidity and selective public market exposure.
Summary
Devin Parekh, Insight Partners co-leader for 26 years, says the $90 billion, fund 13 Databricks backer will stay diversified as OpenAI and Anthropic captured roughly half of first-half 2026 VC dollars. Insight owns both at later stages, off their boards, viewing OpenAI as consumer-led and Anthropic as enterprise-led, while barring direct rivals at Series A or B. Two funds are raising within a month with 35% to 40% earmarked for one lab, but Parekh says most LPs favor diversification.
With 2021-like valuations rising before new data arrives, Insight prefers $20 million to $25 million early checks over $500 million bets, then backs winners such as Wiz. High rates, weak software debt markets and lower exit multiples have blocked a major buyout since 2024. AI infrastructure talent remains concentrated in San Francisco, while Ramp reflects New York’s finance base. Jeff Horing flew to Stockholm for Legora, but General Catalyst won. Insight is watching robotics, which Parekh considers science projects.
Insight returned more than $20 billion to LPs during the past two years through strategic sales and IPOs, with several billion more coming; Parekh advises founders to sell 10% to 20% at frothy prices. He expects Anthropic, OpenAI and SpaceX to list within six to eight months above $1 trillion each, with more IPOs within 18 months; Anthropic reached $65 billion in four years and is already larger than Salesforce. Wonderful hit a $5 billion valuation after two Insight rounds in under two years. Insight expanded a $5 million Armis check from an $11 billion fund into a nine-figure buyout, then sold it to ServiceNow for $7 billion this year. Parekh says NYU Langone AI scans 50 million records to flag 25% heart-attack risk, with faster drugs and scalable elder care outweighing open-source bioweapon risk.
Positives
- More than $20 billion returned to LPs in two years, with several billion more expected, strengthens Insight’s record of converting holdings into cash.
- $20 million to $25 million early checks let Insight limit downside and increase exposure to winners such as Wiz.
- Armis sold to ServiceNow for $7 billion after Insight progressed from a $5 million investment to a nine-figure cap-table purchase.
- Wonderful reached a $5 billion valuation after two Insight rounds in less than two years.
- 50 million NYU Langone patient records can help identify individuals facing a 25% heart-attack risk.
Risks & concerns
- OpenAI and Anthropic captured roughly half of first-half 2026 VC funding, intensifying concentration risk across venture portfolios.
- 35% to 40% of two funds now being raised is earmarked for one frontier AI company.
- 2021-like valuation increases are occurring without meaningful new operating data, leaving investors paying more without reducing risk.
- High rates, unreceptive software debt markets and lower exit multiples have prevented Insight from completing a major buyout since 2024.
- Open-source AI could give a non-state actor tools to develop a biological weapon, while physical intelligence investments remain science projects.