Key Takeaways
- • Peak XV's Shailendra Singh described the current venture market as the most dysfunctional he has seen for seed and venture rounds, with founders facing wide dispersion in valuation, capital raised, and terms.
- • Companies are increasingly attempting to close rounds with as many as three different prices at once, which Singh called "a crazy sign of market froth"; Index Ventures' Jahanvi Sardana dubbed the practice the "tranchopalooza."
- • Singh warned that a venture correction could come as soon as 2027, citing inflated revenue metrics and optimism not seen in two decades.
- • Bessemer's Jenelle Teng Wade said capital is flowing into defense, robotics, and AI infrastructure, including neo-clouds and neo-labs, and that conservative projections no longer work for founders.
- • Investors advised founders to avoid cumulative revenue or ARR charts, which Singh called a "massive red flag," and to prioritize intellectual honesty in metrics.
Summary
Three venture investors offered Series A fundraising advice at TechCrunch Disrupt this year, with a warning that the market is overheated. Shailendra Singh, managing director at Peak XV, said he has never seen seed and venture financing as dysfunctional as it is now. He noted that convincing top firms a company can break out is difficult, and that the terms, capital amounts, and pricing founders can secure vary widely. Singh said it is now common for a single round to be structured with as many as three different prices, which he characterized as a sign of market froth. Jahanvi Sardana, a partner at Index Ventures, labeled this practice the "tranchopalooza," referring to rounds split into separate tranches.
According to the panelists, a Series A pitch should first present a persuasive case that the founder can build a large company. Singh said founders who can attract very high-quality talent have an advantage. Jenelle Teng Wade, a partner at Bessemer, said capital is flowing into defense, robotics, and AI infrastructure. She added that foundational model companies are moving toward vertical integration, but that newer neo-clouds renting AI computing power and neo-labs focused on AI research still have room to compete.
Metrics remain important but are less standardized than before, particularly for AI companies with high compute costs. Teng Wade cited Bessemer's early evaluation of Anthropic, when its margins were negative due to heavy compute spending, and said one partner believed the market for frontier models could be large enough to justify those losses if the company became one of the top three players. The article notes Anthropic is reportedly preparing an IPO at a valuation of around $2 trillion and told investors this month it was profitable on an adjusted basis, a measure that excludes some costs.
The panelists also stressed honesty about metrics amid inflated annual recurring revenue figures. Singh said showing cumulative revenue or cumulative ARR is a major red flag, calling cumulative data "a big lie," and urged companies to be intellectually honest during bull cycles. He said the market is full of false positives and predicted a correction in 2027.
For parting advice, Singh told founders that building a company is among the most difficult endeavors, urged them not to rush, to watch for weak product-market fit, and to set a high bar for the problems they target. Sardana cautioned founders not to let fundable trends dictate what they build. Teng Wade said her earlier advice to be conservative in projections and requests no longer holds, and that founders should be audacious in their asks and tailor from there.
According to the panelists, a Series A pitch should first present a persuasive case that the founder can build a large company. Singh said founders who can attract very high-quality talent have an advantage. Jenelle Teng Wade, a partner at Bessemer, said capital is flowing into defense, robotics, and AI infrastructure. She added that foundational model companies are moving toward vertical integration, but that newer neo-clouds renting AI computing power and neo-labs focused on AI research still have room to compete.
Metrics remain important but are less standardized than before, particularly for AI companies with high compute costs. Teng Wade cited Bessemer's early evaluation of Anthropic, when its margins were negative due to heavy compute spending, and said one partner believed the market for frontier models could be large enough to justify those losses if the company became one of the top three players. The article notes Anthropic is reportedly preparing an IPO at a valuation of around $2 trillion and told investors this month it was profitable on an adjusted basis, a measure that excludes some costs.
The panelists also stressed honesty about metrics amid inflated annual recurring revenue figures. Singh said showing cumulative revenue or cumulative ARR is a major red flag, calling cumulative data "a big lie," and urged companies to be intellectually honest during bull cycles. He said the market is full of false positives and predicted a correction in 2027.
For parting advice, Singh told founders that building a company is among the most difficult endeavors, urged them not to rush, to watch for weak product-market fit, and to set a high bar for the problems they target. Sardana cautioned founders not to let fundable trends dictate what they build. Teng Wade said her earlier advice to be conservative in projections and requests no longer holds, and that founders should be audacious in their asks and tailor from there.
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