DualEntry, a one-year-old artificial intelligence (AI) enterprise resource planning (ERP) startup, announced a $90 million Series A funding round in early October, valuing the company at $415 million. The investment was co-led by Lightspeed and Khosla Ventures.
The company positions its AI ERP offering as an alternative to legacy software solutions such as Oracle NetSuite, focusing on automating routine tasks and delivering predictive insights. While the significant funding round suggested substantial revenue growth, a venture capitalist familiar with the deal told TechCrunch that DualEntry's annual recurring revenue (ARR) was approximately $400,000 when the deal was reviewed in August. DualEntry co-founder Santiago Nestares disputed this figure, stating the revenue at the time of the deal closure was "considerably higher than that."
This substantial valuation relative to reported revenue aligns with an emerging investment approach among top-tier venture capital firms, termed "kingmaking." This strategy involves deploying large capital infusions into a single startup within a competitive category to create a significant financial advantage, aiming to establish market dominance.
Industry observers note a shift in the timing of this strategy. Jeremy Kaufmann, a partner at Scale Venture Partners, stated that while venture capitalists have historically backed perceived winners, this aggressive funding is now occurring much earlier in a company's lifecycle. David Peterson, a partner at Angular Ventures, drew parallels to the "capital as a weapon" strategy seen with companies like Uber and Lyft in the 2010s, but highlighted that such massive funding now commences in earlier rounds, not Series C or D.
The AI ERP sector exemplifies this trend, with several startups securing rapid, consecutive funding rounds. Rillet raised a $70 million Series B led by a16z and Iconiq in early August, two months after a $25 million Series A led by Sequoia. Similarly, Campfire AI closed a $65 million Series B in October, following a $35 million Series A led by Accel just months prior. Jaya Gupta, a partner at Foundation Capital, noted on X that "Series Bs happen 27-60 days after Series As regularly" across various AI application categories, including IT service management and SOC compliance.
While some startups have reportedly demonstrated rapid growth between these accelerated rounds, several VCs indicated to TechCrunch that many AI ERP and other AI startups receiving multiple rounds in 2025 still maintain ARRs in the single-digit millions. Proponents of "kingmaking" suggest that well-funded startups are perceived as more stable by large enterprise buyers, making them preferred vendors for significant software procurements, a factor that assisted legal AI startup Harvey in attracting large law firm clients.
However, historical precedents, such as the logistics firm Convoy and the scooter company Bird's bankruptcy reorganization, demonstrate that substantial capitalization does not guarantee success. Despite these examples, major VC firms continue to prioritize early, significant investments in promising AI categories. Peterson added, "Everybody has fully internalized the lesson of the power law. In the 2010s, companies could grow faster and be bigger than almost anybody had realized. You couldn't have overpaid if you were an early Uber investor."
