Does an AI Premium Exist in the Fundraising Market?
If a company adds AI to their pitch or nabs a .ai domain, will they raise money at a higher valuation?
Nvidia’s sudden surge to $1t?in market capitalization in the public market suggests it could be the case.
The data tells a different story. I plotted the 75th percentile valuation of all US software companies by stage compared to AI companies over the last twelve years.
Seed & A stage companies’ valuations are identical across these two sectors. Series B AI prices surged twice in the last 12 years, driven by a handful of outliers, but otherwise, they also move in lockstep. Across all of them, the correlation is 0.98.
The appeal of AI isn’t just the technology.
Rather, potential astronomical revenue growth fuels valuations by bringing software to new categories & by serving new unmet interest & voracious demand.
The businesses capturing that demand will command massive valuation premiums.
Even with an AI moniker adorning the pitch deck, a software company is a software company.
Near term, probably? In 3 years? ..likely No. Lotta ?? out there…. :)
“I’m always thinking about creating. My future starts when I wake up in the morning and see the light.” ― Miles Davis
1 年What if the AI you are deploying creates an actual advantage in a product line that enables it to compete with established hardware across multiple markets, at 10-50% of the cost of materials and labor of the competitive products? Would that be worth a aluation premium, since that would give the company more free cash flow to sustain the marketing effort. Asking for a friend.
At Good AI Vibes, we firmly believe that adding AI to a company's pitch can significantly increase its valuation. The recent surge in Nvidia's market capitalization further supports this claim. Our bi-weekly newsletter covers AI use cases in various industries, including finance and technology, and we explore how businesses use AI to drive growth. Subscribe to Good AI Vibes to stay informed and join the conversation: https://goodaivibes.substack.com/. Let's keep the dialogue going!
Health & Technology | Pipeline Acceleration | AI Strategy | Sales Automation | Coach | Product Launch
1 年Incorporating AI in a company's pitch or using a .ai domain may indeed attract attention and potentially impact valuations.