Rapidly growing AI funding rounds and quick fundraising cycles are creating signs of speculative excess that risk a market correction. Large round sizes may cause investors to overlook business model quality, including sustainable margins, defensibility, and pricing pressures. Some investors compare the current surge to prior booms like crypto and the dot-com era. Investment firms backing startups from pre-seed to Series B are focusing on companies that replace costly consultants with AI-driven business intelligence and lending or fintech infrastructure. Concern centers on distinguishing genuinely transformative AI applications from fleeting, unsustainable plays.
"One downside of the size of rounds that are happening, and how fast these rounds are occurring, is that investors are perhaps missing this idea of the business model quality," Okike told Business Insider.
Among the investor class, many feel like they have seen this all before, as the eventual conclusion of the AI boom has drawn comparisons to the scammy vibe of crypto - which is once again having a moment - and even the dot-com bust that sparked the dawn of the internet age.
Talk about the firm's investment ethos, notably how it is or isn't investing in AI. The most recent deal I was involved in was with Arbor, which is software that effectively replaces operational consultants. It's an example of an AI company that provides business intelligence. Historically, businesses might have had to go to a high-priced consulting firm to do certain business intelligence projects, rather than using software in real
Collection
[
|
...
]