Key Takeaways
- • Investors put $515.8 billion into startups over the past nine months, yet many non-AI founders are struggling to close Series A rounds, according to Inc.com.
- • Leah Solivan, founder of TaskRabbit and now an investor at Fuel Capital and Precedent VC, says Series A VCs are often declining to meet founders whose companies lack an AI-native angle.
- • AI-native companies are commanding valuations Solivan described as "obscene," while non-AI companies face a bifurcated market.
- • Jenny Fielding of Everywhere Ventures says non-AI founders are raising repeated seed top-ups labeled "seed ones" and "seed twos" as they fail to graduate to Series A.
- • The AI divide extends beyond venture capital, with private equity firms seeking AI-durable businesses and private lenders assessing automation risk to credit.
Summary
Investors poured $515.8 billion into startups over the past nine months, according to Inc.com, yet founders outside artificial intelligence are finding it increasingly difficult to raise Series A capital. The article frames the situation as a sharp split in the private capital markets, with AI-native companies attracting aggressive funding and other companies left stranded at the seed stage.
Leah Solivan, who founded the gig economy platform TaskRabbit in 2008 and sold it to Ikea in 2017, observed this pattern at an event for women entrepreneurs in Napa County, California. Many attendees had successfully raised seed rounds but were struggling to secure Series A financing. Solivan, now making seed-stage investments at Fuel Capital and early-stage investments at Precedent VC, said that when she introduced founders to Series A venture capitalists, many responded that they were focused only on AI and would not meet with founders whose companies were not AI-native. She described AI-company valuations as "obscene" and unlike anything she had seen in 20 years in the industry.
The AI divide is particularly pronounced among venture capitalists, who typically make earlier and riskier investments in emerging technology. Jenny Fielding, co-founder and general partner at Everywhere Ventures, described the market as "really bifurcated," particularly for non-AI companies moving from seed to Series A. She said such founders are "kind of stuck" and are raising successive top-up rounds labeled "seed ones" and "seed twos."
The article notes the effects extend beyond venture capital. Private equity investors are seeking companies that can remain durable in the face of AI, and private lenders are assessing how automation could disrupt the credit ecosystem. The piece presents the trend as a division between AI-linked businesses with ready access to capital and those without.
Leah Solivan, who founded the gig economy platform TaskRabbit in 2008 and sold it to Ikea in 2017, observed this pattern at an event for women entrepreneurs in Napa County, California. Many attendees had successfully raised seed rounds but were struggling to secure Series A financing. Solivan, now making seed-stage investments at Fuel Capital and early-stage investments at Precedent VC, said that when she introduced founders to Series A venture capitalists, many responded that they were focused only on AI and would not meet with founders whose companies were not AI-native. She described AI-company valuations as "obscene" and unlike anything she had seen in 20 years in the industry.
The AI divide is particularly pronounced among venture capitalists, who typically make earlier and riskier investments in emerging technology. Jenny Fielding, co-founder and general partner at Everywhere Ventures, described the market as "really bifurcated," particularly for non-AI companies moving from seed to Series A. She said such founders are "kind of stuck" and are raising successive top-up rounds labeled "seed ones" and "seed twos."
The article notes the effects extend beyond venture capital. Private equity investors are seeking companies that can remain durable in the face of AI, and private lenders are assessing how automation could disrupt the credit ecosystem. The piece presents the trend as a division between AI-linked businesses with ready access to capital and those without.
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