Foreign media reports that as AI funding continues to heat up, leading venture capital firms are beginning to discuss the side effects of this boom more openly. TechCrunch interviewed three investors from Verdict Capital, Threshold Ventures, and the Atom token offering. Their consensus is that while AI has indeed changed the way startups begin, excessive capital concentration, distorted valuations, and exaggerated metrics are also emerging simultaneously.
Funds continue to flow into a few leading companies
Interviewed investors noted that if SpaceX proceeds with its IPO at a high valuation, coupled with subsequent capital moves by companies like OpenAI and Anthropic, it could further boost attention in the technology market. Supporters believe that such large-scale liquidity events will attract more funds and entrepreneurs back to the technology sector, rather than simply diverting liquidity from the secondary market in the short term.
Their core argument is that the wealth effect generated by the IPOs or financing of leading companies often flows back to the next generation of startups. Especially in high-profile sectors like AI and aerospace, market enthusiasm may initially concentrate on a few star companies before spreading to the broader startup ecosystem.
The AI boom has led to significant homogenization.
However, the interviewees also acknowledged that the current allocation of funds in the venture capital market has become significantly skewed. Niko Bonatsos stated that about three-quarters of the venture capital funds raised in the past year went to five companies, indicating a "homogenization" trend in the market that he has rarely seen in his many years in Silicon Valley.
In his view, startups that don't fall under the AI category will face significantly increased difficulty in securing funding. However, he also points out that AI tools are shortening the early-stage setup cycle for startups. What used to require a 10-person team, a year, and multiple rounds of funding can now be completed by two founders in two months. This will change the pace of a company's journey from seed funding to subsequent rounds of financing.
Valuation and revenue metrics are both changing.
Andreas Stavropoulos, a partner at Threshold Ventures, believes this wave of enthusiasm will likely undergo a correction, with some capital exiting overheated sectors. Short- to medium-term performance is still lagging behind current market expectations. However, in the longer term, he doesn't believe the market's overall assessment of AI is overly optimistic.
Regarding project pricing, Ben Blume, a partner at Atom's token issuance division, stated that top-tier founders don't lack funding; investment institutions are more realistically concerned with securing a shareholding percentage that is meaningful to the fund. If that's not possible, they have to give up. The difference in bidding power among funds of different sizes for the same project is also driving up the size of funding rounds, making price comparisons more difficult.
Respondents also expressed caution regarding the ARR (Annual Recurring Revenue) metric commonly used by AI companies. With the emergence of new models such as token-based billing, some companies are becoming more lenient in calculating annualized recurring revenue, potentially even exaggerating daily revenue from short-term activities into annualized figures. Investors interviewed believe this will increase the difficulty for the market to assess the true state of business operations.
