Companies not associated with artificial intelligence are encountering difficulties in securing funding. This statement was made by Tribeca Venture Partners co-founder Brian Hirsch, as reported by TechCrunch.
Founders of such projects feel “like they’re in high school and weren’t invited to the party.” They may have a solid business and revenue growth, but no one seems to care.
“Venture funds are eager to support companies in the AI sector at inflated valuations, but everything else is at risk,” noted Hirsch.
The platform Carta analyzed around 2000 deals in 2024 and found that the bottom 10% of Series B rounds were valued at $40 million, while the top 10% of companies were valued at nearly $1 billion. In the case of Series D, the range was even wider—from $27 million to $5.2 billion.
Companies at the top of the range operate in the AI sector. For instance, ElevenLabs raised funds earlier this year in a Series B round valued at $920 million. Cohere was valued at $5.5 billion in a Series D round.
Hirsch noted that even if non-AI companies raised funds in a Series A round a year and a half ago and show steady revenue growth, they struggle to find new funding.
Data from Carta indicates that only 9% of companies that closed a Series A round were able to secure Series B funding within two years. Before the AI boom, the figure was 25%.
In the third quarter of 2024, crypto venture investors poured $213 million into AI-related projects, a 340% increase from the previous year’s figure.