Unbalanced Venture Funding Landscape: AI Boom Creates Challenges for Non-AI Startups
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AI Boom Masks Fundraising Struggles for Non-AI Startups
The recent surge in artificial intelligence (AI) investments has left many non-AI startups struggling to secure funding at desirable valuations. According to Brian Hirsch, co-founder of Tribeca Venture Partners, these companies are being forced to “grow up” too fast.
Hirsch explained that the current fundraising landscape is starkly divided between AI-powered businesses and those that don’t rely on this technology. He emphasized that non-AI startups must “adjust their business models quickly” if they hope to stay afloat amidst this intense competition.
In fact, data from Carta suggests that only 9% of Series A companies without AI capabilities have been able to secure subsequent Series B funding within the two-year mark – a significant decline from the previous rate of 25%.
As a result, Tribeca Ventures is leveraging its growth fund to help non-AI startups restructure their capital stacks. Specifically, the firm targets companies that have already generated substantial revenue (in excess of $20 million) but are struggling to maintain or grow their valuations.
Many founders of these non-AI startups reportedly feel as if they’ve missed out on the AI party, with no invite in sight. Hirsch likened this experience to being left out of a popular high school social gathering – an awkward and isolating sensation.
Notably, even well-performing non-AI startups are finding themselves in a precarious position due to their lack of AI involvement.
Source: techcrunch.com
