Venture capitalists are recalibrating their investment strategies for artificial intelligence (AI) startups, moving away from traditional metrics in response to the sector's rapid growth and unique dynamics. Discussions at TechCrunch Disrupt 2025 highlighted a shift towards new evaluative criteria for funding AI ventures.
Aileen Lee, founder and managing partner of Cowboy Ventures, stated during the event that AI requires a distinct investment approach compared to previous technological shifts. Lee noted that some AI companies have achieved "zero to $100 million in revenue in a single year," indicating an accelerated growth trajectory. However, her firm's research suggests that Series A investors are seeking more than just rapid revenue, employing what Lee described as "an algorithm with different variables and different coefficients." Factors now considered by investors include the startup's ability to generate data, the strength of its competitive moat, the founders' prior accomplishments, and the technical depth of the product.
Jon McNeill, co-founder and CEO of DVx Ventures, reported that many startups experiencing rapid initial growth, reaching up to $5 million in revenue from inception, frequently face difficulties securing follow-on funding. McNeill indicated that Series A investors are now applying stringent standards to seed-stage startups, a level of scrutiny previously reserved for more mature companies. He emphasized the importance of a strong "go-to market" (GTM) strategy, suggesting that breakout companies often excel in customer acquisition and retention rather than solely possessing superior technology.
Steve Jang, founder and managing partner of Kindred Ventures, presented a differing view, asserting that both robust technology and an effective GTM strategy are essential for securing investment and customers. McNeill later clarified that while a solid product remains important, his initial observation underscored the necessity for founders to develop an exceptionally strong sales and marketing strategy from a company's outset. He commented that "Investors are getting much more sophisticated on the go-to market than they have in the past."
Lee further observed that AI startups are currently under pressure to deliver product updates and new features at an unprecedented pace. This accelerated development is intended to preempt established companies from introducing similar offerings. Despite these expectations for rapid growth and swift product development, the panelists largely agreed that the AI industry remains in its nascent stages. Jang noted, "There are no clear, outright winners, even in LLMs," suggesting continued opportunities for new entrants to challenge perceived market leaders.
