E=AI²: How Artificial Intelligence is Warping Venture Capital and Leaving Other Startups in the Dust

The AI Singularity (of Funding)

Good heavens it appears the universe is indeed expanding – not just physically but financially too and all toward the realm of Artificial Intelligence! According to a recent dispatch from Silicon Valley Bank a staggering 40% of all venture capital in the United States last year flocked to funds that proudly declared 'We heart AI!' Back in 2021 it was a mere 10%. One might say the other startups are feeling a bit... relatively deprived. As I always say 'The only thing more dangerous than ignorance is arrogance,' and perhaps the arrogance of these AI ventures is blinding them to the plight of their less algorithmic brethren. Is it all relative you ask? Well that depends on whether you're holding the checkbook.

Megadeals and the Fabric of Spacetime (and Capital)

These 'megadeals,' as they call them – $100 million or more! – are largely responsible for this cosmic shift. Giants like OpenAI and Anthropic are gobbling up capital like black holes consuming matter. Exclude AI investment and the report sadly notes 'There is no meaningful uptick for companies not leveraging AI.' It seems innovation like time is now curved by the presence of AI's immense gravitational pull. Perhaps these other startups should try claiming their products have 'quantum entanglement' capabilities. After all 'reality is merely an illusion albeit a very persistent one,' so why not try to convince investors of a more lucrative reality?

Trump Tariffs and the Uncertainty Principle

Ah politics! It seems even the machinations of Presidents can't alter the fundamental laws of venture capital. Some hoped a return of President Trump with his promises of lower taxes and deregulation would reignite the startup flame. But alas new tariff policies threw a wrench into the gears causing planned IPOs to be postponed. It's a bit like trying to predict the exact position and momentum of an electron simultaneously – impossible! As I said before 'God does not play dice,' but it seems politicians certainly do.

A Glimmer of Light: IPOs and Hopeful Trading Platforms

Fear not! There is a glimmer of hope. The tech IPO market shows signs of life. eToro a trading platform had a successful debut and others are preparing to follow suit. And CoreWeave an AI infrastructure provider reported astronomical revenue growth. Their stock price surged proving that even in a universe governed by complex algorithms there's still room for a little luck. After all 'gravitation is not responsible for people falling in love,' but perhaps good revenue is.

The 'Zombiecorn' Apocalypse

But the road is paved with peril. A lack of exits leaves venture firms yearning for returns. And with so much capital funneled into AI other startups risk ending up in 'no man's land.' They become 'Zombiecorns' – those with poor revenue growth and unit economics. A dire situation indeed! It reminds me of the time I misplaced my socks after a lecture. Lost alone and utterly without purpose. Except in this case it's the startups not the socks that are suffering. Truly this is a tragedy of great proportions!

Exceptionalism and the Future

Is AI keeping American tech exceptional? Perhaps. But exceptionalism without empathy is a dangerous thing. We must remember that progress should benefit all not just the algorithms. As I always said 'Try not to become a man of success but rather try to become a man of value.' Let us hope that the venture capital universe finds a way to value all forms of innovation not just those that scream 'Artificial Intelligence!'