Comment on AI startups should brace for a wave of down rounds, investors say. Here's how it might play out.

AI startups should brace for a wave of down rounds, investors say. Here's how it might play out.

Buzzy AI startups are struggling to command the same valuations from a few years ago. PM Images/Getty ImagesAI startups have raked in over $35 billion in 2024, but many have inflated valuations.VCs say that capital-intensive startups struggling to generate revenue are raising flat or down rounds.It's pushing AI startups to turn to 'acquihire' arrangements and secondary share sales.Down rounds and flat rounds for VC-backed startups have hit an all-time high this year since 2014.And AI startups, which have been the darlings of the tech ecosystem since late 2022, aren't exempt from the trend.Case in point: buzzy startup Inflection AI raised $1.3 billion at a $4 billion valuation in 2023.

 

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