What VC's Are Looking For in AI Startups Today
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What is the main topic discussed in this episode?
Welcome to the podcast. I'm your host, Jaden Schaefer.
What are the current trends in AI startup investments?
Today, I want to talk about what investors are doing in 2026 when it comes to investing in AI startups. And I think it's interesting because right now, investors are basically telling you what they aren't looking for anymore in AI SaaS companies. It has shifted a lot, which is interesting for me being someone who has my own SaaS company, AIbox.ai, which I'm sure you've heard me talk about before, because we recently did an entire redesign of the platform where you get access to over 50 of the top AI models in one place for $8.99 a month.
How important is workflow ownership in AI solutions?
But I think this is broadly speaking, pretty interesting and important for the overall AI industry, because what investors are looking for here, number one means this is what people are building. But this is also what we're likely to see more of when it comes to updates inside of the AI industry as a whole. So this is what we're going to jump into on the podcast today.
What are VCs avoiding in AI startups today?
What I think is interesting is investors have poured billions of dollars into AI for the last few years. This isn't a trend that is slowing down. And I think all of this technology really has played a huge role in Silicon Valley's basically their priorities and a lot of what comes out of the global tech industry. I think even in a market right now that is obviously very obsessed with AI. I mean, if you if you look at every basically every single company that is raising money now is no longer just a SaaS. It's like an AI company.
What types of AI startups are gaining investor interest?
And so I think while every company has kind of added AI to their sales, like their pitch deck, basically for VCs, I think it's becoming a lot more selective on who's actually getting money, right? You can't just put AI on your pitch deck and get money. So according to one of the first interviews or kind of data points I got on what VCs are looking at as far as investing in AI companies today that maybe they weren't in the past is from Aaron Holiday. He's a managing partner at 645 Ventures. And by the way, TechCrunch did a whole rundown where they interviewed a bunch of different people. I'm grabbing some quotes there and also grabbing some data from the overall industry that we're tying together in kind of this episode in this report.
But Aaron Holliday, he's a managing partner at 645 Ventures.
Why are generic AI tools losing appeal to investors?
And he says that the category is still getting the most interest are AI native infrastructure. So that's vertical SaaS built on proprietary data. systems of action that actually complete tasks and platforms embedded deeply into mission critical workflows. So basically, in other words, products that own something really essential. And there's a keyword I think he said in here that I 100% agree with. And that is, he said, AI that actually completes something. So, I think there's a lot of this, a lot of these startups that were like, hey, look, we have like a SaaS, we have a tool, and then we stuck ChatGPT on top of it. And you could chat with ChatGPT and it can give you like ideas about what you're looking at.
In my opinion, that's very, I mean, basically, that's just the original SaaS. It's not super interesting. It might give you like some ideas or help you troubleshoot or you don't need their customer support as much. But what I'm talking about when I see AI and what I think a lot of these investors are looking for is AI that actually completes something. In the past, maybe I had to manually write a title and description for my podcast and
How are pricing models evolving in the AI industry?
And today, AI can grab the transcripts of the audio file and do that for me. And if that's actually like accomplishing something for me, it's useful. Whereas if it was just like, I don't know, a chat bar on the side where it's like, you know, ask me what would be a good description for this. Type in your title and I'll give you some ideas like that is not useful. It's not automatically doing something for me. And that example I just gave you is like very basic. I mean, I think ideally you would upload an audio file and it would fill out all of the data and automatically find the best time to post it and look at your calendar and blah, blah, blah, blah, blah.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:00–0:02
2
What are the current trends in AI startup investments?
0:02–0:32
3
How important is workflow ownership in AI solutions?
0:32–0:51
4
What are VCs avoiding in AI startups today?
0:51–1:18
5
What types of AI startups are gaining investor interest?
1:18–2:00
6
Why are generic AI tools losing appeal to investors?
2:00–3:00
7
How are pricing models evolving in the AI industry?
3:00–4:55
8
What is the future outlook for AI startup investments?
4:55–11:18