Why investing in growth-stage AI startups is getting riskier and more complicated | TechCrunch
Jun 06, 2025 - techcrunch.com
Investing in AI startups is both thrilling and risky as major players like OpenAI, Microsoft, and Google rapidly expand, overshadowing smaller companies. Startups are reaching growth stages faster, with some achieving high valuations and revenue within a year. However, these companies often lack essential infrastructure, making investments risky. Jill Chase from CapitalG highlights the excitement and confusion in growth investing, emphasizing the importance of founder adaptability and foresight. She cites AI coding startup Cursor as an example of a company that must evolve quickly to maintain its competitive edge as AI technology advances.
Rebecca Bellan, a senior reporter at TechCrunch, covers various topics including AI, Tesla, and Big Tech regulation. She co-hosts the Equity podcast and writes the TechCrunch Daily newsletter. Bellan has a background in covering social media for Forbes and has contributed to several major publications. She is also an investor in Ethereum.
Key takeaways:
AI startups are reaching the growth stage much faster than before, with some achieving high valuations and revenue within a year.
Despite rapid growth, many AI startups lack necessary infrastructure, making investments risky.
Investors need to focus on the adaptability of founders and the relevance of their technology to future advancements.
AI coding startup Cursor exemplifies the need for companies to evolve their products to maintain relevance as technology advances.
