New York Investors Raise Concerns with AI Legislation

By New York Venture Capital Community | May 29, 2025

Empire Report obtained the following letter from prominent New York venture capitalists raising concerns about AI legislation moving through the state legislature. The letter was sent to Assembly Speaker Carl Heastie and Senate Majority Leader Andrea Stewart Cousins on Thursday, May 29.

May 29th, 2025
The Honorable Carl E. Heastie
Speaker, NYS Assembly
Capitol Building, Room 349
Albany, NY

The Honorable Andrea Stewart-Cousins
Majority Leader of the NYS Senate
Capitol Building, Room 330
Albany, NY

Re: Concerns Regarding the Responsible AI Safety and Education (RAISE) Act (A.6453/S.6953) and its Impact on New York’s AI Innovation

Dear Speaker Heastie and Majority Leader Stewart-Cousins,

As a collective of venture capital partners and entities who invest deeply in New York startups and companies, and are committed to the future of technology and innovation, we are writing to express our serious concerns regarding the potential unintended consequences of the proposed “Responsible AI Safety and Education (RAISE) Act” (A.6453/S.6953). While we commend the Legislature’s commitment to ensuring AI safety, we believe that certain provisions within this bill could significantly impede the continued growth of New York’s vibrant AI sector, disproportionately harm open-source development, and ultimately hurt New York’s competitiveness in attracting and retaining AI companies compared to other states and countries.

New York City has rapidly emerged as a global leader in AI innovation – and we are proud to have invested in the founders, companies, and new local jobs behind these cutting edge technological developments. In 2023 alone, approximately one-third of all venture capital raised by NYC startups was directed to AI companies, with over $27 billion in funding flowing into NYC AI companies since 2019. This robust investment fuels a thriving ecosystem of over 2,000 AI startups and 40,000 AI-ready workers in the city. The RAISE Act, however, threatens this momentum.

The RAISE Act introduces mandatory pre-deployment safety protocols and annual third-party audits for advanced AI systems, termed “frontier models.” While the intent to ensure AI safety is laudable, the practical implications of these requirements are deeply troubling. The current ecosystem for independent, qualified AI auditors is nascent at best, meaning that imposing such mandates now would create severe bottlenecks, significantly delaying critical development cycles. This could grant an emerging and unproven auditing industry immense power to dictate product development and stifle innovation, ultimately favoring established, large corporations over nimble, growing startups.

Beyond the impact on established companies, the RAISE Act would present a crushing burden to open-source AI development. The bill’s stringent liability components, coupled with comprehensive auditing requirements, would make it incredibly difficult, if not impossible, for individual developers and smaller teams to contribute to and release open-source AI models without incurring prohibitive legal and financial risks. This would choke off a vital pipeline of innovation, knowledge sharing, and talent development that has historically propelled technological advancements.

New York has cultivated a thriving environment for AI innovation, attracting substantial investment and top talent. The RAISE Act, in its current form, risks undoing much of this progress by increasing costs, hindering speed to market, and creating an uneven playing field that stifles competition and creativity. Critically, when AI companies choose where to invest and build, such stringent and uncertain regulations will significantly diminish New York’s competitiveness, pushing them towards other states and countries with more welcoming, innovation-friendly frameworks and potentially driving talent and capital away from our state. We urge the Legislature to reconsider the practical implications of the RAISE Act’s auditing and liability provisions.

We stand ready to collaborate with you and your colleagues to craft legislation that effectively addresses AI safety concerns while simultaneously fostering a dynamic and competitive environment for AI development in New York. We believe that thoughtful regulation can encourage responsible innovation without inadvertently creating insurmountable barriers for the very companies and individuals driving technological progress.

Thank you for your time and consideration of these critical issues.

Sincerely,

Zach Aarons
MetaProp

Lisa Blau
Able Partners

Aaron Block
MetaProp

Neil Blumenthal
Investor, CEO & co-founder, Warby Parker

John Borthwick
betaworks

Brad Burnham
USV

John Buttrick
USV

Nick Grossman
USV

Matt Harrigan
Company Ventures

Jared Hecht
USV