Early-stage investing in an AI-driven market

Episode notes

In this episode of InvestorExchange, Jackson Cummings, head of Wellington Access Ventures, discusses how early-stage investing is evolving. The conversation explores how expanding sourcing networks can uncover differentiated opportunities, how discipline is maintained across long feedback loops and amid rapid innovation, and how AI-driven shifts are reshaping competition, underwriting, and much more.

1:30 – Jackson’s background in early-stage venture
4:30 – Expanding the investable universe
6:00 – Building early-stage venture networks
7:45 – Why founders choose Wellington
9:45 – Discipline through long feedback loops
11:35 – Understanding the venture J-curve
14:20 – How AI is reshaping early-stage venture
17:15 – Diving deep on AI opportunities
20:00 – Underwriting adaptability amid rapid innovation

Transcript

Jackson Cummings: Part of how we think about the world is really looking to expand the investable universe. And what does that really mean? We believe that there are so many capable founders operating outside of the traditional corridors of the venture capital industry. These are creating untapped opportunities for investors looking to invest outside of that typical pattern recognition that has been within the traditional Silicon Valley mold for many years.

Will Craig: Today, we're stepping into one of the world's most exciting corners of finance: early-stage venture investing. This is an area where bold ideas meet bold capital and founders create at the leading edge of innovation and disruption. Among other topics, we'll explore how to spot potential before the rest of the world does, and what it really takes to back potential winners before anyone else sees it coming. Hello and welcome to the Investor Exchange. My name is William Craig, platform leader for Wellington's private equity platform. Joining me today is the head of Wellington Access Ventures, Jackson Cummings. Jackson manages the firm's private company investment activity and early-stage companies, and there's no better person to help us navigate the investment opportunities being created by industry defining entrepreneurs and changemakers. Welcome to the show, Jackson. It's great to have you.

Jackson Cummings: Thanks, Will. Excited to be here.

Will Craig: To kick things off, I want to start with your background, which I think is truly impressive and very interesting. Running back at Stanford University, you really served in a limited partner role at top-tier capital, selecting managers, and then finally as an investor at Salesforce Ventures. As you think about those different experiences, how do they shape the way you think about investing?

Jackson Cummings: You're going way back into the archives here. You had to bring up Stanford football in a down year, but it's all right. I think if you think about the through line, you know, of all of my experience, I think it's been rooted in competition, curiosity, and the continued growth mindset. We happened to be a top team in the country. No thanks to me. But I really saw excellence firsthand at an organizational level and realized that everybody doing their job and growing 10% better each day really with a fresh start, can create triumph together as a team. And to mention, it was competition day in, day out. And then, kind of moving forward to my experience at Top Tier Capital, it really shaped my viewpoint of the venture capital market with access to incredible data covering some of the major venture capitalists in the industry, really saw firsthand how and what created differentiation and value. It drove my curiosity to markets and to founders in an industry that was really in constant change, and especially in this current day, you really need to be able to be malleable and how you move and change. I think that perspective really helped. And then lastly, Salesforce really provided the ability to see a platform with really strong brand recognition and full understanding of what drives enterprise value from build-by-partner community of partners, investors, employees really could see the value that one plus one equals four in a conversation and how that can really affect founders at the earliest stages.

Will Craig: I think it’s fair to say, you're no stranger to dynamic or stressful environments. And certainly at an establishment like Salesforce where you're investing, via kind of a corporate VC arm. I mean, why would you leave something like that to come to Wellington and build Wellington Access Ventures?

Jackson Cummings: I think there's actually a number of similarities, at least how I think about venture. Being at Salesforce, you really had the ability to drive a network above and beyond with just our small Salesforce Ventures team could do. We had not only partners, we had executives, we had product folks. And when I think about it here at Wellington, we not only have our early-stage venture team, which is fantastic, we also have a number of leading industry analysts that cover the markets. We have multiple people internally that run the organization that can help us opine on the technology solutions that we're looking to invest in, which really is a differentiator compared to just a typical venture fund. And then here at Wellington, being able to layer not only our value creation platform team that we have here for our early stage and for our platform, but also leaning into some of these industry analysts that have been covering these markets for decades.

Will Craig: Early stage investing really is about outliers, and you've said this to me before. I think it's a fantastic way of summarizing your outlook on the space. But this idea that talent is universal, but access to capital and opportunities aren't necessarily equal. You know, how does that underpin the way you look at early-stage investing and where you look for opportunities among founders?

Jackson Cummings: Part of how we think about the world is really looking to expand the investable universe. And what does that really mean? We believe that there are so many capable founders operating outside of the traditional corridors of the venture capital industry. These are creating untapped, really alpha opportunities for investors looking to invest outside of that typical pattern recognition that has been within the traditional Silicon Valley mold for many years. And that's really an area that we look to go and find talent and look to invest behind. Another thing to think about here is unequal access to capital really creates an interesting dynamic. One on one hand, the data shows that, there tends to be pricing inefficiencies in areas of less competition. While on the other hand, company execution is really what is going to drive additional not only investor interest but ultimate value for that company and for those shareholders. And so this is an idea where we really look to lean in, trying to find that that line where we can provide additional access to these founders that may be at the edges, may be outsiders from the traditional mold, invest to be able to partner and accelerate that value.

Will Craig: Private markets are opaque. Access to information can be challenging. And so I think more so on the early-stage side where networks are absolutely critical. I mean, they're critical across private equity, but I think they're perhaps the most critical on the early-stage side of venture investing. How do you build that network?

Jackson Cummings: As we think about our community and network building, I think on one hand, it's really proactive community building. This is engaging with the accelerators, the incubators that are a round or two earlier than we're investing in, being active, staying current, continuing those relationships. In addition, our team is taking an approach of looking to build within the nonprofit communities, either from ones that myself, our team have built in the past and continuing to lean into these different communities, providing value to these communities and therefore being able to see who we think are going to be the top talent coming out of these communities. And really a second leg of how we think about sourcing to continue to build our network. I think the reality is just continuous renewal, right? For those investors, those GP's who have been in industry for more than a decade, like myself, rotating your network at its edges over the years, incorporating newer people into these old networks, people that you've been in doing deals with for, for eight, 10, 15 years are still going to be a part of that network. But as you're taking on new boards, as you're finding new relationships, continuing to sort of renew and refresh, this is obviously very key. And then the last piece is just signal amplification. So if I'm not a frequent LinkedIn poster or a social media poster, or when I do post, I try to make it count to be able to actually find those points of emphasis that are really going to be advantageous, either for the ideas that our team are coming up with or thinking about, you know, really important press releases for our portfolio as well. And so that's kind of how I think about it. It is sort of an ever evolving and ongoing goal really to see the top talent in the industry.

Will Craig: All right. So bear with me because I'm going to use a cliche, football analogy here. But if sourcing gets you into the red zone, how do you punch it in? How do you compete? With these companies that are best in class, highly competitive other investors are looking at, how do you access those companies?

Jackson Cummings: It's a great question. And really the name of the game. In a highly competitive industry with a lot of different options, there's a couple of things that really come into play. One, from our standpoint at Wellington, we really do provide institutional credibility, right? Nimbleness of a boutique. So our team of qualified venture investors, but being backed by an institution like Wellington, an institution that has been around for decades focused on investor and client performance, right? I think one that is something that does stand out, from the founder ecosystem. The second piece here is really thinking about this from a full lifecycle perspective. So as you highlighted, we're thinking about investing at the early stages. Seed, Series A, often early stages within these companies life spans. And not only can we come in and invest and support, at different levels along the journey. We have investment platforms that are investing pre-IPO before a company goes public. And taking companies public and then being a longstanding holder in those public markets. And then last, but not least, is that strategic access. What are the global insights? How can I tap into these deep relationships and expertise beyond capital. I think if you're a savvy founder building in this day and age, you're not only looking for that check that can go into your company, but what else can that investor do for you? And so while I think unabashedly, we think that we can come in and be really strong people and advice either on the board or investors on the cap table, we also get to bring the sort of institutional-level expertise, the quality and grade and that full lifecycle partnership that we hope to be able to bring to our portfolio companies as they grow, mature.

Will Craig: So you found a company now you've determined how to compete to win access to that company. From here, the feedback loop is it incredibly long, potentially eight to 10 years for an outcome. And so a decision you make today, you may not learn or be able to iterate or improve on for another eight or 10 years. I'm curious, how do you stay disciplined through such a long feedback loop? And what are the traits that signal conviction to you at such an early round, like a seed or a series A?

Jackson Cummings: There's these long feedback loops, but you know one of the things that we try to stay focused on is process over outcome. We really try to focus on the input quality in this, meaning the founder, the market, and really, ultimately, the slope of learning that these founders have. It's really trying to peel back the layer of understanding: what is the process that we are looking to sort of establish as our team and go and try to find the inputs there. The second is these conviction signals. The technical depth of the team, founder/market fit; insight density of a solution that matters, more than just that first-sign customer. And so while as mentioned, these first early indicators around either revenue, customers, early scale, may be nice. The questions that we really try to focus on is how can we replicate and scale this with durability over the course of the next ten years? Because that's really what's going to matter. And then the last point here is just, data-informed patience. One of the things that our team does take a look at, and I think the industry has looked at, is the graduation rates. And the graduation rates mean going from the round of funding that we have invested in, whether it be Seed or Series A, and the time it takes to graduate to the next round of funding. From our standpoint, these do serve as health checks, but it's not the sole determining factor of whether this company is going to be successful or not. We recognize in the industry, graduation rates over from 2021 to 2022 have come down dramatically. And that just means that the bar has risen for that next round of financing. In a time of quick adrenaline rush and dopamine hits of extraordinarily fast ARR growth, I would prefer highly durable, sustained growth with customers that are sticky and high retention.

Will Craig: You bring up a really interesting point on graduation rates. And next, I want to take us to where the market's at today and your observations. But I do think it's helpful to look back to that time frame you referenced of 2020, 202. Because for any of our listeners that might have been new to venture as an asset class at that point in time, probably pretty incredibly exciting to invest in a company or a capability that is raising subsequent financing rounds in a short period of time. In some cases six months when, you tell me, but I think today it's closer to two years. And the indirect follow-through there is at the bottom line in terms of performance and there's a term in the industry, a J curve. But what is a J curve and why does that influence a J curve? Just the fact that companies graduating more quickly at significant step ups.

Jackson Cummings: So a J curve at the at the really most basic level is the draw down and value back to a venture capital fund over time. And so what that means by that is, as you are starting to call down capital within the fund, you're starting to make active investments in the ground, whether it be seed that you hope will mature eventually and grow in value.

But as over the course of the first few years of the venture capital fund’s life, these could be calling down capital and where most of your investments are going to be held at cost. Usually in the first few years of the life, you'll really start to understand which companies are going to be your early breakouts. That may show additional follow-on capital with either up rounds, or you're also going to understand the ones that are, for whatever reason, not going to be working out. Whether you had a missed timing of the market, whether there's some missed execution, or whether there's some competition that has really taken more market share than you anticipated. This is really the nature of early stage. And there's going to be these risk factors at play when you're making these investments. So as you sort of mature through the portfolio, that J curve is when you are either writing down companies or, in some cases, looking for acquisitions. This may sort of draw down below the call it 0% IRR range, with the goal and what we sort of recognize over the course of the past 30 years of venture capital is this is going to occur within the first few years of the fund before it comes out of the J curve, and you're starting to see those up rounds occurring at that 24- to 36-month mark. And you're starting to see those early winners, which ultimately are going to be driving a lion's share of the value of the fund. And I think as you took a look at venture capital funds, the first few years of their life, while you could see good markups and you could see markdowns, it's really indicator of the seven to 10 year lifecycle is how you should really be looking to evaluate the performance of these funds.

Will Craig: I would say another maybe interesting comparison to compare and contrast is what you're viewing in terms of size of rounds. I've heard it said that pre-seed is the new Seed and you have very large strategies and platforms writing potentially in some cases within artificial intelligence, billion-dollar checks into companies that may not have a product, may not have any revenue. How does that shift, in terms of competitive landscape and pacing and the associated exit assumptions, impact an early-stage investor?

Jackson Cummings: I think this sort of moment of time that we're in is really a new paradigm shift with AI. We'll talk a little bit about early stage and how that sort of affects what we're seeing in the market. It has created an environment with far more noise and far more competition at the earliest stages. You have these different platforms that enable you to build solutions extraordinarily quick from the vibe-coding platforms to the ability on the infrastructure level to spin up and get up to ground really quickly. You're seeing a huge vastness of more competition at the early stages. I talked about a little bit earlier on staying focused on our process, but we're really focused on not only staying focused on that process, but learning and adapting with the market. We have to be disciplined to the strategy that we set out to sort of invest behind. I think at the end of the day, we come back to our process. Here at Wellington what can we iterate on, and how do we continue to try to find the best results for our clients? And so, in this sort of huge ocean of new opportunities being driven by AI, how do we find the ones that we can be right for our strategy? And how do we find the ones that we think can drive outsized value? I think the second piece here that you sort of highlighted is the advent of these mega rounds that are coming together. And these are companies that are getting spun up very quickly that have massive rounds of financing that are going into them. And we try to be convicted on whether or not it makes sense for us to participate. We are likely going to be a very small shareholder in those cases, in which cases, where we're not likely to be participating. You brought up the sort of exit assumptions and how that has changed in the market and what we do and have recognized is companies are staying private for longer and longer. But what we have noticed is really an uptick in AI driven acquisitions in M&A and we really looked at identify the build-by-partner sort of dynamic. And we try to understand that not to make any sort of quick decisions or moves, but at the same time, understanding what the market is given us. And what it has shown over the past couple of quarters is much more M&A activity.

And I think at the same time, if there are going to be these massive rounds of financing into the billions or multiple billions of valuation or above, I do, being a good steward and a fiduciary for our clients, are opportunistically could look at what a secondary transaction or secondary market could look like for our shares. And so I think at the end of the day, we spend a lot of time advising and spending time with our founders, but we also at the same time have to understand what could be best for our clients.

Will Craig: You focus a lot on business-to-business products or business models, financial technology, and consumer markets. Are you seeing any impacts or kind of platform-level changes via AI in these particular sectors and in any one sector more than another?

Jackson Cummings: This really is a new paradigm shift in the industry. We could probably spend a whole hour talking about this, because our team goes extraordinarily deep on some of these thematic areas. We think we think about both from a sector standpoint at a highest level where we would look to invest in you had you called it out between B2B, fintech, and consumer. And then from there, we go really deep around thematic areas of expertise. And that partners with our public market investors, our industry analysts. And really combining the research that we have here at Wellington, mixed with what we are seeing from the early-stage environment and new sort of trends that we're seeing pick up as well. I'll highlight a couple real quickly here that our team has been spending time on. One of the things that I think is really exciting on the B2B side is AI-driven automation, you're hearing it everywhere. And a couple of the areas that we're seeing this delivered is in the back office, as well as decision-heavy functions. And so for one example, just to call it out, is within the HR and hiring market. One of the things that we have also tried to peel back and understand is, well, this is from the software standpoint, what is sort of the human capital that goes into recruiting in HR? And this could be north of a half a trillion dollar market. Well, if some of this can be done autonomously and thinking about AI-driven interviewers and trying to help produce additional processes on that recruiting standpoint, well, this has the ability to massively change this market that we've seen shift from decades and decades of human capital management. And so that is one area that I think where we're starting to see disruption, that I think will continue over the coming years. And then I think the second area is around the AI infrastructure landscape. Obviously the hyperscalers, capital spend is up 70%-75% year over year, and new AI workloads could drive north of a trillion dollar and new infrastructure demand.

At the same time, while that demand is there, what we're also recognizing is the massive need for cost optimization, compute, storage, and orchestration across the enterprises. And so while I think we're seeing the continued growth of the spend that's happening at the infrastructure layer, understanding how to better fine tune a layer or two below that is another area where we've been spending a lot of time, and I think that is creating not only great new opportunities, but we're seeing companies who have built and done this at scale gonna be able to sort of uplevel that to the next sort of solutions.

Will Craig: How do you think about underwriting companies that might be more mid-cycle in their development? I mean, things are changing so rapidly and new business models are evolving that are potentially disrupting companies that were started even just a few years ago. How do you underwrite that? I mean, it's a rapidly evolving space, and I think so dynamic.

Jackson Cummings: It's a great question. You have funds that are in the five- to eight-year vintage timeline. And I think one of the things that we really try to focus on is adaptability. As we're reviewing founders, not just today, but over the course of the past number of years, really focusing on the ability to iterate quickly. And really, how can you do this through uncertainty is much easier said than done trying to assess this. But I think we really do try to come back to slope: slope to growth and slope to, of adaptability. And that is really going to be key in this market. It's about execution, speed, and adaptability. I think a second piece here is underwriting the thesis and not the feature. And while maybe a killer app or a wrapper of today or even yesterday, could have meaningful revenue growth, you know, this may ultimately be a timely vitamin and not the painkiller.

I think the last piece here is really dynamic diligence. We cannot change what is going to be out of our control, but we better have an idea of what is coming. And so trying to work alongside our public market teams, trying to continue to put our understanding and tentacles out into the market. Staying really tight and understanding our existing solutions as well as those around us. I think one thing to note, I mentioned our value creation team earlier on in the segment, but we went out and we ran a survey of all of our portfolio companies. Not only at the early stages but in stages in late as well, to understand what tools that they're using at the enterprise levels. Are there AI enabled tools that you know that they're using for either in the coding department, engineering, back of office, finance. And I think from our standpoint, by understanding and staying on top of who our own portfolio is looking to use and utilize gives us an idea and direction of some of the solutions And so for our existing companies that are sort of at this crossroads of, hey, we may not have been this AI-enabled layer, we are incorporating it into what we are doing so that we can continue to optimize for this AI future.

Will Craig: So it's clear that there are a lot of exciting dynamics underway in early-stage venture. And, you know, whether that's founders innovating and disrupting at very high levels, the leading edge of technology, or even investors themselves approaching the space in different ways. Despite that, it remains true that the blocking and tackling of competing in this space really boils down to your ability to source, access, and ultimately create value for companies in such a competitive environment. Thank you for joining us on Investor Exchange. That's Jackson Cummings, head of Wellington Access Ventures. Jackson, thanks for being here.

Jackson Cummings: Thanks, Will, that was a lot of fun. I appreciate it.

Views expressed are those of the speaker(s) and are subject to change. Other teams may hold different views and make different investment decisions. For professional/institutional investors only. Your capital may be at risk. Podcast produced February 2026.

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