The Groupthink Wave: Perspectives from Three Top VCs on the AI Boom

During this week’s TechCrunch StrictlyVC event in Athens, part of the Panathenea festival, I had the opportunity to interview Niko Bonatsos of Verdict Capital, Andreas Stavropoulos from Threshold Ventures, and Ben Blume of Atomico. Our conversation revolved around the current state of venture investing, the anticipated mega-IPOs led by SpaceX, and the myriad opportunities that remain untapped. The dialogue below has been summarized for brevity and clarity. For the full discussion, please scroll to the bottom of the page.

Given that SpaceX is aiming for a $1.75 trillion valuation at its IPO, along with companies like OpenAI and Anthropic, what could this mean for the broader market?

Andreas Stavropoulos: The buzz around the Google IPO was significant; it marked a turning point when the tech sector, previously pessimistic, began to rebound. That IPO set the stage for a new wave of entrepreneurs. We’re seeing a similar revival today. Each cycle of paradigm shifts reshapes the landscape in meaningful ways. Which business today isn’t tech-driven?

Ben Blume: These are exceptional firms, and each of these substantial liquidity events paves the way for wealth generation and returns for the next generation of businesses.

Niko Bonatsos: My co-founder at Verdict was one of the earliest investors in what is now Cursor. If Elon is optimistic, then Cursor—recently disclosed by Musk to have a $60 billion acquisition option—might also receive promising news. More generally, as Andreas mentioned, future companies might target significantly larger markets. Immigrant founders, fueled by bold ambitions and little to lose, exemplify this—Elon Musk being one of them. For those of us from Greece or similar smaller markets, this is a true source of inspiration.

Some express concerns that SpaceX’s valuation could monopolize public market capital, adversely impacting subsequent companies. Is this a legitimate worry?

Stavropoulos: Most situations can be viewed from either an optimistic or a pessimistic lens, both often backed by strong logic. A major player like SpaceX will likely draw more investors into the market, offsetting any immediate liquidity concerns. Over the last three decades, consumer engagement in markets has skyrocketed, resulting in significant growth.

Blume: SpaceX is in a league of its own. Traditionally, space initiatives have been the realm of government and the public sector. Allowing investors a financial stake in this domain will likely spark immense interest. While some funds may redirect their focus from software companies, the enthusiasm generated by this shift is expected to be immensely beneficial.

Is the current surge in AI investment driven by anticipated earnings, or is it merely a product of overwhelming FOMO?

Bonatsos: For AI-native founders or companies tapped into the American dynamism, it’s a thrilling time. Conversely, if you’re outside these spheres, opportunities are limited. In my 17 years in Silicon Valley, I’ve never seen such extreme groupthink; 75% of recent venture capital was funneled into just five companies. Nowadays, if you’re a tenured Stanford professor not exploring AI, securing meetings has become a challenge.

That said, change is occurring. Founders utilizing modern AI tools can accomplish more in two months with a single funding round than was possible a year ago with a larger team and multiple rounds. This shift is redefining how companies are built and financed, potentially allowing for seamless progress from pre-seed to Series B.

Stavropoulos: A correction will inevitably take place, pushing some capital out of the market. The promise and excitement far exceed the short- to medium-term ability to deliver results. However, on a macro level over the long haul, I believe optimism is warranted. Still, it shouldn’t imply that every 19-year-old with an idea is automatically destined for success.

How do you evaluate deals accurately in such a fast-changing environment?

Blume: Top founders have multiple funding options. It’s vital to define what a meaningful ownership stake looks like for your fund and to walk away if it isn’t feasible. An interesting dynamic here is that a $500 million fund finds itself competing against much larger funds. The marginal value of a dollar can vary significantly between us and them, complicating round sizes and terms.

Bonatsos: We concentrate on early-stage investments, focusing on distinctive individuals—those who can accomplish in a day what average founders might do in a week. Many of our backed founders are exploring uncharted markets, which accounts for lower valuations; larger asset managers aren’t able to instruct their teams to uncover companies in non-existent markets.

There’s a lot of talk about younger founders receiving term sheets almost immediately. Does age have any real significance now?

Stavropoulos: In disruptive periods marked by fundamental changes, lack of experience can be a strength. Experience can mislead you. While this trend isn’t permanent, currently unsettled times create fertile ground for innovative ideas, often favoring younger entrepreneurs. Nonetheless, I want to avoid making overly broad generalizations.

Bonatsos: A similar trend occurred when I began my journey as a grad student at Stanford in 2009. With the iPhone just two years in existence, there were days when the number of VCs on campus eclipsed the number of students. Today feels reminiscent of that era once again. If you’re 22 in San Francisco working on AI, a seed term sheet could soon be in your inbox—if you’re 19, that likely indicates exceptional talent [laughs]; you might even receive a Series A offer. Age is relative; I spoke with a 24-year-old founder in Athens this week, and when I mentioned he wasn’t that young, I genuinely meant it. I met the Mercor team at 19, and look where they are today.

Blume: Focusing solely on age overlooks the broader picture. We are seeking qualities like intensity, the capacity to stay ahead of market trends, and the agility to adapt in a rapidly evolving landscape. These traits are far more important than age.

What are your thoughts on the questionable practices surrounding metrics, particularly regarding how companies report ARR [annualized recurring revenue]?

Blume: Companies frequently stretch their definitions of A, R, and R. New pricing models—like token-based billing—can provide diverse interpretations of these figures. As investors, we must look beyond the surface and rely on actual realities, essential for deciding which companies receive funding. While it might be effective from a marketing angle, it falls short as an investment criterion. Yet, seasoned investors can generally see through the noise.

Bonatsos: Occasionally, I receive emails showcasing impressively high ARR figures from portfolio companies I don’t recall performing that well. Upon reaching out to the founders, I often find out it was an unusual spike from a marketing campaign. I suggest they at least use quarterly figures. When significant capital chases specific trends, some may adopt a grifting mindset for short-term gains.

In venture capital, a bad investment results in a one-time loss, while a successful one can bring back returns of up to 100x. Thus, it’s wise to dismiss bad actors and look ahead.

For aspiring founders in the audience, what opportunities do you see currently available?

Bonatsos: Many VC firms used to have half their partners focused on consumer internet investments; now, they might have just one partner focused on that area. However, one of the most successful AI companies recently, OpenAI, surged thanks to ChatGPT. The consumer sector is enjoying a resurgence, which is somewhat unexpected. Founders today may find themselves pitching to only five investors for subsequent funding rounds. Additionally, a new movement emerging in consumer fintech seeks to revitalize the American dream.

Blume: The fusion of AI with the physical world represents an enormous opportunity compared to what we’ve witnessed in workflow automation and digital processes. The physical environment still drives a significant portion of the economy. Investments in robotics, including those that aren’t humanoid, remain some of the most promising prospects for the next decade.

To explore more of their insights—including whether Stanford University has become overly entrenched in the venture capital landscape—check out the complete conversation below: