Itamar Novick – Recursive Ventures
“The ones that really go big are companies that get to a one winner take most dynamic.”
Connect with Itamar
https://www.linkedin.com/in/itamarnovick/
VC Uncovered’s View
Success in the current AI cycle is not about participating in the infrastructure gold rush; it is about identifying the application-layer survivors. While the common narrative suggests that the real value lies in the massive capital expenditures of AI infrastructure, Itamar Novick and Recursive Ventures operate on the reality that we are currently navigating an infrastructure bubble; one that mirrors the 1999 Cisco era before the inevitable correction. For Itamar, the goal is not to fund the "routers" of the AI age, but to back the "services-as-software" platforms that will emerge from the burst with exclusive, defensible data moats.
The operational reality at Recursive is defined by the high-velocity precision of a "solo capitalist" model; a structure designed to eliminate the friction of committee-based decision-making. In a market where founders now "seed-strap" companies with lean teams and agentic workflows, getting it "almost right" means backing a team that lacks the architectural foresight to build a "winner-take-most" dynamic. The hardest part of Itamar's day is the rigorous filtering of execution risk; he leans heavily toward repeat entrepreneurs because he understands that the "trail of fire" inherent in scaling to a $5 billion IPO leaves no room for first-time muscle memory errors. If a founder cannot demonstrate a marginal cost that trends toward zero while owning a unique data set, the business fails the "venture scale" test.
Itamar holds a sobering conviction regarding the immediate future of the ecosystem; he anticipates that the current AI infrastructure bubble will burst in 2026 or 2027. He believes this correction will fundamentally erode the advantages of old SaaS systems of record, giving rise to a new frontier where AI accounting firms and automated enterprises do 99 percent of the work with near-perfect accuracy.Meet Itamar
Q: You can be anywhere. Eating, drinking, and reading your favorite thing. Paint the scene.
A: I am a huge traveler. I spent a year in India backpacking; another six months in Latin America with my wife; and months backpacking in Australia. We skip the Four Seasons; it is about the experience and genuine connections with people. When I am not traveling, I tinker. I am a geek who wrote my first line of code at 11. I have over 250 connected devices in my home and I love playing with everything; installing it, fixing it, and sending bug reports.
Key Quotes
“The ones that really go big are companies that get to a one winner take most dynamic.”
“AI can eclipse SaaS and take over a lot of what SaaS is capable of doing; it is a pivotal point for venture capital.”
“If you’re talking to Recursive, you’re talking to me; a person who just finished building a 5 billion dollar company.”
“I believe we are in an AI infrastructure bubble. I think it will burst in 2026 or 2027.”
“Go dig up the unsuccessful companies that shut down and ask those founders what happened. That is when people expose their true face.”
Background and Personal Journey
Influential Experiences
I have been in startups for 25 years on all sides of the table. I am a serial entrepreneur and executive who took my last company, Life360, public at a 5 billion dollar market cap. I started as VP of Product and ended up as the CFO who took it public. I even borrowed 2x my net worth to buy out a co-founder early on. Before that, I was at Gigya, one of the first SaaS companies. Having built engineering, product, sales, and support teams from scratch gives me a superpower in supporting founders. I have a high-level understanding of every single thing they need to build to be successful.
The Inspiration
My VC career actually started on Sand Hill Road as a senior associate at Morgenthaler Ventures, which is now Canvas Prime. I was there from 2010 to 2012; a storied old-school firm where we were in companies like Lending Club, Evernote, and MuleSoft. That is where I really landed the role of venture capital. From there, I started angel investing and set up an accelerator called UpWest to bring Israeli companies to the Bay Area. I have been deploying capital for 15 years now.
The Solo GP Superpower
I believe solo GPs are the best partners for founders. When you talk to Recursive, you are talking to a single decision-maker who has actually built something real. In bigger partnerships, the dynamics can be negative for founders; you show up to a Monday morning meeting where four other partners who do not know your business throw random questions at you. As a solo GP, I can make a decision in a day. I can make contrarian bets on crazy ideas that a committee would turn down; and those often end up being the best investments of my career.
Unconventional Belief
I believe venture capital is under threat by AI. The whole model is going to change completely. We are entering an era of seed-strapping where founders can raise 1 million or 2 million dollars and build what used to take a 100 million dollar check. With vibe coding and 10x engineers, you do not need 50 engineers and 20 salespeople anymore. This is a fundamental shift in technology that erodes the advantages of old systems of record.
Intuition vs. Data
I am institutionalized in the sense that I have a rigorous process, but I live for intuition. There are three things that are a absolute no-go for me: Team, TAM, and Moat. If I am not blown away by the people, I am not doing the deal; everything else is secondary. In pre-seed, your ability to diligence only goes so far because there are typically no customers. I rely on soft signals; who sent me the deal, what have they built, and what is their founder-market fit.
Philosophy and Insights
Principles for Founders
I am a little bit of a unique VC because I do not pretend to know how to run a founder’s business better than they do. I am friendly, helpful, or I get out of the way. I do not take board seats. My founders call me when “S hits the wall,” whether it is founders fighting or board issues. I have raised over 500 million dollars and built a public company board; I use that experience to be there for my founders when things get aggressive.
Practical Back-Channeling Tactics
My word of advice for founders is to never take money from a VC without back-channeling them first. Do not just talk to the successful companies they give you as references. Go dig up the unsuccessful ones that shut down and ask those founders what happened. How a VC deals with the downside when things are bad is the only way to understand who you are actually partnering with.
The Perfect Pitch
I look for a strategic long-term advantage; a moat. If you are building a product, can you generate unique, exclusive data sets that help you continuously improve your AI? I want to see a business where the marginal cost of servicing one more user trends to zero. If you can show me a path where, 10 or 20 years from now, you are making 500 million to a billion dollars in revenue because you own the market, that is venture scale.
Approach to Risk
I do not like taking execution risk. That is why two-thirds of my deals are with successfully repeat entrepreneurs. There is so much risk in startups already; I cannot back people who do not know how to build stuff. I also lean away from “blue ocean” projects that might have a market 10 years from now. I would much rather invest in a disruptive business model that caters to an existing large market where I know the TAM is real.
Trends and Future Vision
Emerging Trends
I am operating under the assumption that we are in an AI infrastructure bubble that will burst in 2026 or 2027. We are in 1999; Cisco was worth a trillion dollars for building routers, then it blew up, but Google and Amazon came out of it. I am focused on the application layer. I see three big areas: consumer AI rewriting human-machine interaction; agentic automation in the enterprise; and services-as-software. We are going to have AI accounting firms that do 99 percent of the work accurately. That is the next frontier.
VC Misconception
VCs get too much credit. I give all the credit to the entrepreneurs. We are just here to finance them and make sure they do not do really stupid stuff. The general audience thinks VCs help these companies come together and win, but that is a misconception. It is the founders doing it; we just need to give them money and get out of the way.
Systemic Improvement
I would kill preferred shares at the seed stage. It is controversial, but preferred shares make it more complicated for everyone. Venture is governed by the power law; if I get my 1x back on an investment, it does not move the needle for me or my LPs. We are really there for the 100x returners. By slapping on protections that you do not need at the early stage, we are just slowing things down.
The Founder Challenge
The biggest challenge for first-time founders is the “trail of fire” they have to go through. They have to learn everything from scratch; like how to let go of half a team or manage a board. Second-time founders have already gone through those ups and downs. VCs can help by being the first call when things go wrong and providing a narrative for subsequent funding rounds. I have supported over 25 startups in graduating to Series A because I know what the next level of investors is looking for.
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