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In today’s market, no single metric defines what a Series A is, or how to raise one. At this year’s TechCrunch Disrupt, three investors offered founders advice on raising one, and one of them tacked on a warning. With money pouring into AI and revenue numbers being inflated to justify sky-high valuations, a correction could come as soon as 2027. The warning came from Shailendra Singh, a managing director at Peak XV, who spoke alongside Jahanvi Sardana, a partner at Index Ventures, and Janelle Teng Wade, a partner at Bessemer. “Seed and venture, I’ve never seen it as dysfunctional as it is now,” Singh said, adding that the current market is one of the hardest to raise in that he has seen. “The burden is high to convince any top firm that you are amongst the few special companies that can break out, and then the dispersion is very high on the terms you might get, how much capital you can raise, and what terms you can raise it,” he continued. In fact, it’s common now to see a company trying to close a round with as many as three different prices at once. “[I]’s a crazy sign of market froth,” he said. “We’re calling it the ‘tranchopalooza,’” Sardana added, referring to the way rounds are being split into tranches, or separate chunks. Beyond the warnings, the investors laid out what they look for in a Series A pitch, including, first, a persuasive story about why a founder has a shot at building a big company. “Founders who can attract very high-quality talent have an advantage,” Singh added. What a founder builds matters, too. Teng Wade said capital is flowing into areas such as defense, robotics, and AI infrastructure. She also noted that foundational model companies are moving toward vertical integration (taking on more of the stack themselves), but there’s still room for newer players, including neo-clouds that rent out AI computing power and neo-labs focused on AI research. Metrics, meanwhile, still help a lot, but they are less defined than they used to be, especially in an era like AI where it’s incredibly expensive to run a company. Teng Wade gave an example of how her firm evaluated Anthropic in its early days, when its margins were negative, and it was spending heavily on compute. One partner on her team, however, felt that AI was going to be “bigger than everything we’ve ever expected in terms of price premium on the frontier models,” she said, “becoming a substitute for other types of software.” The logic was that even with money-losing margins, the market would be big enough to pay off if the company became one of the top three players. Anthropic is now reportedly preparing an IPO at a valuation of around $2 trillion. It told investors this month it was profitable on an adjusted basis, though that measure excludes some costs. The investors also spoke about the importance of honesty in a market like this, where inflated annual recurring revenue (ARR) numbers are swirling alongside headline valuations. “I tell founders, If you ever show a chart which shows cumulative revenue or cumulative ARR, that is a massive red flag,” Singh said. “It means that your time series data is not good because cumulative data is a big lie.” Added Singh: It’s important for a company to be intellectually honest in how they are presenting and engaging in bull cycles.” Singh said the market is full of “false positives” because “it can’t be that every company is going to be successful. This is as optimistic as I’ve seen the venture world in two decades, and normally it’s a sign. I think 2027 will be different. I think we will see a correction.” Finally, the panelists were asked to give founders at least one piece of parting advice. Singh went first, reminding founders that building a company is one of the “most excruciatingly difficult things” one can do. And with that, “deal with it,” he said. He also urged founders not to rush into something, to watch out for weak product-market fit, and always hold the bar very high for what they are trying to solve. Sardana said it is important to know how to pitch but that founders should be careful not to let that dictate what they build. “It feels like [founders are] deciding what to build based on what’s getting funded, which is really scary,” she continued. Teng Wade, meanwhile, said her typical advice of telling founders to be conservative with their projections and requests hasn’t really held up. “I would say just be audacious in your ask,” she now says, and see how the market responds, “and then you can tailor from there.”
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