In the current economic environment, corporate financing has shown a polarized trend. Venture capital institutions are enthusiastic about investing in the AI field, but companies in other fields are facing severe financing challenges. This article will delve into the reasons behind this phenomenon and how venture capital companies respond to this situation, as well as analyze the difficulties encountered by non-AI companies in the financing process and future development trends.
Earlier this year, Tom Loverro, a partner at venture capital firm IVP, declared that the post-pandemic economic downturn was over, suggesting that companies should prioritize growth over cost cutting.
However, there are still thousands of companies struggling to raise their next round of funding at higher valuations or survive, according to Brian Hirsch, co-founder of Tribeca Venture Partners.
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Tribeca Venture Partners, a 13-year-old investment firm, has a late-stage investing strategy that differs from traditional growth funds, Hirsch said, focusing on companies that have been forced to raise money at the same or lower valuations than in their previous rounds. In many cases, existing investors are willing to provide additional financial support, but they need a third party like Tribeca Ventures to evaluate the deal.
Hirsch pointed out that while venture capital firms are enthusiastic about the high valuations of AI companies, companies in other fields face severe challenges. According to the latest valuation data from Cap-table management platform Carta, an analysis of nearly 2,000 software deals this year shows that the lowest 10% of companies in Series B financing were valued at just US$40 million, while the highest 10% were valued at close to US$10 million. billion dollars. The price gap is even more pronounced for Series D financings, ranging from $27 million to $5.2 billion.
Companies in the upper reaches of valuations are undoubtedly related to AI. This year, well-known AI companies such as ElevenLabs successfully raised US$920 million in Series B financing with a valuation of US$920 million, while Cohere's Series D financing ended at a valuation of US$5 billion.
In sharp contrast, the financing environment for non-AI startups is completely different. Hirsch mentioned that although non-AI companies successfully obtained Series A financing 18 months ago after the end of the zero interest rate policy (ZIRP), they faced difficulties in obtaining Series B financing, even with good revenue growth. As wished.
Hirsch likens founders of non-generative AI startups to being like people in high school who weren't invited to the party. Their businesses were doing well but no one was interested. In fact, Carta's data shows that only 9% of Series A companies are able to secure Series B financing within two years, a significant decrease from 25%.
However, Tribeca Ventures is using its growth fund to help mature startups with their financing issues, primarily those with more than $20 million in revenue. These companies are growing at acceptable rates, but the current market valuations are too high. Hirsch emphasized, "We are still in a de-foaming process and it is expected that it will take about two years of clean-up work in the future."
Highlights:
**Financing for AI companies is booming, while financing for non-AI companies is very difficult. **
**Only 9% of Series A companies successfully secure Series B financing within two years. **
**Tribeca Ventures focuses on helping mature companies deal with excessive valuations. **
All in all, financing in the AI field is booming, while other fields are facing challenges. This reflects the market’s huge confidence in AI technology and expectations for the future direction of economic development. Non-AI companies need to adapt to the new market environment and seek new financing strategies to remain invincible in future competition. In the next two years, the market will continue to de-bubble, and companies need to respond cautiously.