This story appears in the November 2025 issue of Entrepreneur. Subscribe »
We’re living through one of the biggest technology supercycles in history. Artificial intelligence isn’t just a new feature or platform — it’s a new substrate, the layer upon which the next generation of companies will be built.
Think back to what AWS did for cloud computing. Suddenly, the world had on-demand compute, and that infrastructure change unleashed an entire generation of software companies. AI is that, but multiplied by a thousand. For the first time, human-level intelligence is available on demand, anywhere. Every product, every workflow, every industry will eventually rebuild itself around that reality.
At the foundation layer, we have large model companies providing the “intelligence utility.” Above that, founders are racing to build the application layer — companies that leverage this new substrate to solve real problems. What’s fascinating is that every layer of this stack is advancing simultaneously. The infrastructure is evolving, the tooling is evolving, and even the act of shipping software is changing. We are in a feedback loop of accelerating capability.
Related: How AI Is Becoming a Game-Changer in Startup Fundraising
Because this technology is real — because it replaces a portion of human labor and intelligence—AI-native startups are scaling faster than ever. But that acceleration has consequences. It’s changing what investors expect from early-stage companies.
Two or three years ago, you could raise a Series A with promising usage metrics and an early customer or two. Today, investors are benchmarking you against a completely different cohort — companies with real revenue, high growth velocity, and clear signs of market pull.
The result is that the fundraising market has bifurcated. At the pre-seed and seed stages, not much has changed: It’s still art over science, still about backing founders and ideas. But once your product hits the market, momentum becomes everything. If your growth isn’t among the best of the batch, you’ll find fundraising to be brutally competitive.
Founders need to internalize that venture is a relative game. Investors are choosing from the option set in front of them, and that set is stronger than ever. The median startup today is simply better — better product, faster growth, more measurable traction. The bar has risen, and there’s no going back.
At the same time, founders should be deliberate about which problems they choose to solve. Many categories are already overcrowded — AI copilots for developers, AI assistants for vertical niches, AI analytics for X. When 10 teams attack the same category, only one or two can truly break out.
... continue reading