If there’s a consensus among VCs when supporting AI startups, it’s that AI demands a different investment strategy compared to previous technological revolutions.
“It’s a strange period,” stated Aileen Lee, founder and managing partner of Cowboy Ventures, during TechCrunch Disrupt 2025. The experienced VC mentioned that investment rules have changed significantly, with some AI companies growing from “zero to $100 million in revenue within a year.”
However, Lee also indicated that, according to her firm’s research, Series A investors aren’t solely focused on rapid revenue growth. “It’s an algorithm featuring different variables and coefficients.”
According to Lee, some factors investors now consider include whether the startup is generating data, the strength of its competitive advantage, the founders’ previous achievements, and the product’s technical sophistication. “Depending on your specific company, the algorithmic formula’s result will vary,” she explained.
Jon McNeill, co-founder and CEO of startup creation firm DVx Ventures, noted that even startups experiencing rapid growth from their start to $5 million in revenue often struggle to obtain further funding. “I believe the rules of this game have shifted, and are continuously evolving,” he stated.
McNeill mentioned that Series A investors are now applying the same strict criteria to seed-stage startups that they formerly used for more established companies.
“I believe many investors have realized that the most successful companies, in most instances, don’t possess the best technology,” McNeill said, explaining why Series A VCs are closely examining startups’ ability to attract and retain customers. “They excel at go-to-market strategies.”
Techcrunch event
San Francisco
|
October 13-15, 2026
Steve Jang, founder and managing partner of Kindred Ventures, disagreed that a strong go-to-market (GTM) strategy, the industry term for sales and marketing, carries more importance for investors. “I don’t believe it’s entirely accurate to say that mediocre technology combined with a great GTM strategy wins, raises money, and acquires customers. I think both are essential requirements.”
While McNeill later clarified the importance of having a solid product, he indicated that his earlier remark pertained to the founders’ need to establish a remarkably effective sales and marketing strategy from the outset. “Investors are becoming much more knowledgeable about the go-to-market aspect than they were previously,” he said.
(The discussion about marketing versus technology was further highlighted during the conference when Roy Lee, founder of the viral startup Cluely, mentioned on stage that launching a product that barely functioned, even with widespread social media attention, might not always be the optimal approach.)
Lee added that AI startups are also facing pressure to release product updates and new features at an unprecedented rate, anticipating existing companies that might attempt to launch similar products. “When you observe the pace at which OpenAI and Anthropic are releasing products, you’ll need to determine how to match their shipping speed, volume, and quality,” she stated.
Despite the expectations for rapid growth and swift product development, panelists concurred that the AI sector is still in its nascent stages. As Jang phrased it, “There are no definite, clear frontrunners, not even in LLMs. Competitors are consistently challenging their positions.”
This suggests that startups still have opportunities to surpass perceived leaders, whether they are long-standing corporations or rapidly emerging newcomers.
