Adam Hardej

May 18, 2023·Newsletter

Two Fundraising Realities

Two Fundraising Realities

Ugh, fundraising is so tough right now... *AI company announces $1 Trillion Dollar Raise*... Wait, it's easy? It's hard to know how to feel. Seems like there are pockets of the startup world that are still living in 2021.

There two pretty distinct realities playing out in the fundraising world:

  1. Fundraising being really hard for startups
  2. Fundraising being really easy for AI startups

There are a number of factors that play into that, but it's all pretty reasonable. It's actually probably more reasonable than anything we've seen in recent history. I also think a lot of people of over-reacting to how "hard" it is to raise money right now.

It could definitely get worse, but right now... I don't think it's that bad. Which is basically what I said last week. To go a tad deeper though.

Why is it hard for some startups and not for others (AI)?

First, on the "it not being that bad" point that I'm sure is a bit triggering. Fundraising is hard - for sure - and it used to be easy, but now it's hard again and I think that's normal. The part that wasn't normal is when fundraising was easy.

The point being that I think fundraising is a normal amount of hard right now. There's still a lot of money being deployed, but it's not being thrown around as willy-nilly. Which, overall, is probably for the best.

Except in AI. Money is definitely being thrown around in AI.

My point there though is that it's actually a fair reaction given the inflection point it feels like we're at with the tech. Both from a capability and an adoption perspective.

Maybe I'm getting caught up in the hype, but if you're a VC investor your only job is to not miss the next Facebook and paradigm shifts like AI (see the internet and cloud computing as past examples) seem to produce those types of wins.

Would you have passed on Facebook at $35B in the private markets 2 years before IPO? Easy to say now, but the point is that it does happen sometimes... VCs don't just burn money for fun. (right?)

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