AI startups will need ‘quality of revenue’ to raise in 2025, seed VCs warn

VCs prioritize 'quality of revenue' for 2025 AI startups funding.

: AI startups must focus on 'quality of revenue' to secure funding in 2025, VCs emphasize. Companies with robust fundamentals and loyal customer bases will have an edge. Notable customers like Zapier boost investment prospects for startups like Braintrust. The focus will shift from mere revenue numbers to sustainable business models.

Renata Quintini, from Renegade Partners, highlighted the contrast in fundraising for 2025, emphasizing that companies targeting large markets will attract funding, while those needing to solidify business practices might struggle. The trend follows the 2024 surge in AI funding and the challenging conditions for other sectors, particularly fintech.

Corinne Riley of Greylock noted that no specific sales milestone would guarantee funding; instead, VCs seek 'quality of ARR', valuing customer retention over mere revenue figures. Elizabeth Yin from Hustle Fund echoed this, stressing the importance of unique offerings to build a 'moat' and secure a loyal customer base.

Highlighting success, Riley cited Braintrust, a Greylock portfolio company that attracted significant investors due to marquee early customers. Elliott Robinson from Bessemer Venture Partners discussed shifts in AI investment, warning that past revenues might be unsustainable as CIO budgets tighten, pressing startups to provide substantial value.

AI FundingVenture CapitalRevenue Quality