"Many startups had already landed six- to seven-figure customer contracts, including a company that was only eight weeks old, she said, so there were companies asking for $5 million at a $40 million post money."
"The big venture firms, flush with cash, are also moving into rounds earlier, driving up startup prices and valuations in hopes of cashing in big if these companies exit or IPO one day."
"As an investor focused on AI infrastructure, Smith said she can easily find herself priced out of a round, especially when a larger firm moves in."
"Shanea Leven, founder of the enterprise AI application platform Empromptu, blames Cursor, which, in early 2025, hit $100 million in revenue in just 12 months."
In 2024, Pete Martin raised a $5 million seed round for his AI cybersecurity company at a $25 million valuation. Currently, $10 million seed rounds at $40-$45 million valuations are common for AI firms. Investors are primarily focused on AI, leading to inflated prices. At Y Combinator's Demo Day, startups with early revenue were seeking high valuations. Larger venture firms are entering rounds earlier, increasing competition and valuations, while smaller firms struggle to keep up. This trend has resulted in fewer seed deals but higher valuations overall.
Read at TechCrunch
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