The team is thinking hard: which three VCs are thinking about AI the most

This week at TechCrunch’s StrictlyVC event in Athens – part of Panathenaia festival happening in the city – I sat down with Niko Bonatsos of Verdict Capital, Andreas Stavropoulos of Threshold Ventures, and Ben Blume of Atomico to ask about their current progress, the wave of mega-IPOs that SpaceX is about to start, and where they still see the ocean of opportunity. Our discussion, which follows, has been edited for length and clarity. You can watch the full interview on the website below.

SpaceX is reportedly looking at a $1.75 trillion IPO valuation, and OpenAI and Anthropic may not be far off, what will be the impact on the big market?

Andreas Stavropoulos: I remember how exciting the Google IPO was, and how it marked the re-opening of a market that had no hope for technology in the early 2000s – how it was a catalyst event that ushered in a new generation of entrepreneurs. The same thing is happening now. With each subsequent paradigm shift, the scales change in magnitude, and that is to be expected. What business today is not a technology business?

Ben Blume: These are amazing companies, and every one of these financial events, they generate wealth and returns that go back to the next generation of companies.

Niko Bonatsos: Mrs co-founder at Verdict he was the first to sell what is now known as the Cursor. So if Elon feels like it’s (is) a good moment, maybe Cursor (which Musk recently revealed he has access to $60 billion) will also have good news. But seriously, for the next generation of companies, as Andreas said, they can go after the big markets, and foreign founders, as we know, are the ones who dream a lot, they have nothing, and they can go far, and Elon Musk is the only founder. So, for those of us who come from Greece or other smaller markets, wow, you know, that’s a great example.

Some have said that SpaceX at this price could increase the market capitalization which hurts the companies that come out later. Is that really a concern?

Results: You can choose to see many things as normal or pessimistic and create arguments that are good for both. Something like SpaceX, very smart, will bring more people to the market than the short-term impact that brings in more money. Consumer participation in shopping over the past 30 years has gone from something that was nothing to something that people do over the phone every day. Those numbers add up.

Bloom: SpaceX is just one company. For a long time, space has been the domain of the state and the government. Giving investors access to capital – I think that would attract a lot of attention. It may take their ideas from the long-tail segments that would probably go into the next 20 or 30 software businesses, but I think the interest it generates more than pays off.

Is the current boom in AI worth the future, or is it just a case of FOMO?

Bonuses: If you are a native of AI or a company in the American dynamism space right now, you can have a fast life. If you are not in one of these two buckets, it is very difficult. In 17 years in Silicon Valley, I have never seen such a crowd. Three-quarters of the company’s total revenue last year went into five companies. Today, if you’re a 40-year-old professor at Stanford not building something in AI, no one wants to meet you.

That said, something real is changing. Two startups with today’s AI tools can make more progress in two months with one round of funding than they could a year ago with ten people, two trips, and a full year of work. This is changing the way companies get started and how they can raise money – perhaps going straight from seed to Series B.

Results: There will be a fix that pushes some money out of the market. The promise and hope is still very much ahead in the short to medium term to show results. But for the long, long term, I don’t think we’re optimistic. The problem is that we shouldn’t make the mistake of thinking that every 19-year-old has an idea and it’s the next big thing.

How do you sell when things are moving so fast?

Bloom: Successful startups have no shortage of great options. You need to think about the beneficial ownership of your fund, and walk away when you can’t get there. The interesting thing is that we are a $500 million fund looking at the same opportunities that people invest from a $10 or $15 billion fund. The high dollar value for us versus them is very different. This interferes with circular growth and makes it difficult for ads to be kept as-is.

Bonuses: We invest first – mostly on behalf of friends and family, on behalf of angels. We invest in things that I would call “fools” – people who, like in high-profile sports, a few people break the record. Another day goes by and they learn and mature and make progress that takes a genius startup a whole week. Most of the founders we’ve supported so far are working in markets that don’t have a name – that’s why the number is low. Senior property managers cannot tell their teams to go find companies in a market that doesn’t exist.

There’s a lot of talk about very young startups getting long term papers as soon as they arrive. Does age really represent anything useful right now?

Results: In times of chaos, when the world seems to be changing in some way, it tends to lack awareness. Experience can lead you in the wrong direction. This does not mean that it has been changed forever – we are going through a phase where things are not settled, and this creates a fertile ground for new ideas, and for young entrepreneurs. But I don’t want to overdo it.

Bonuses: The same thing was happening when I arrived as a grad student at Stanford in 2009. The iPhone was two years old, the App Store was one year old, and there were days when there were more VCs on campus than students. Today is one of those rare moments. If you’re 22 years old in San Francisco and you’re building something in AI, there might be a seed sheet in your box – but if you’re 19 years old, oh my God, that means you’re good (laughs); you may already have a Series A (offer). And look, age is all relative at this point – I was talking to a founder here in Athens this week who is 24 years old, and when I said he wasn’t young, I mean it: I met Mercor’s kids when he was 19, and look where they are now.

Bloom: If you try to adapt from the years, I think you are missing what you are looking for: a high level of energy, the ability to move forward at the speed of the market, and the technical skills to adapt to the environment that is constantly changing. If you have those things, they are more important than the age on the passport.

What do you make of the dark practices going on around metrics – especially how companies report ARR (annual recurring revenue)?

Bloom: People are getting comfortable with how they define A and R and R. New value models – token-based payments, free tokens that count as money – create more ways to represent these numbers. Our job as investors is to cut through this and make decisions based on the facts. Is it good for advertising? Maybe. Is it better to choose companies that earn money? No. But smart investors can often solve this problem.

Bonuses: Sometimes I get an email with a very high ARR number from a company I don’t remember doing well, so I contact the founder. The answer? It was 365 times what he did the day before because the campaign was done. I told him, can you please use a quarter at least? Whenever a lot of money is chasing the real headlines, some people are thinking hard to make a short-term profit.

In trading you can lose your money only once on a bad investment, but the right one can return 100x – so you write the bad ones and move on.

For those who want to start an audience, where do you see the white space right now?

Bonuses: Each VC firm had half of its peers investing in the internet. Today, they have maybe half a person – they have left the whole garden. But one of the best AI companies of the past few years, OpenAI, grew out of ChatGPT. The buyer is returning, which is almost a crazy word. Their founders today have maybe five dollars to invest in their first or second venture. I think there is also a new movement coming up that will help restore the American dream through a new fintech buying mindset.

Bloom: The opportunities for AI to connect with the world are orders of magnitude greater than what we’ve seen so far in electronic and digital technologies. The world still makes up a large part of the economy. Betting on robotics in all its forms – not just backtracking – is one of the most open areas of the next 10 years.

If you want to know more about what these three think – including whether Stanford University has become too big for the business world – you can watch the whole conversation below: