059 - Realities of Funding

I've come to realize that over at least the past year, terms like "Seed" and "Series A/B/C" have begun to lose all meaning. AI companies are claiming to raise a "Series B" when they still have no actual product, often to the tune of hundreds of millions of dollars.

Several startups have raised over $1 billion before they even had their first "product", and in most cases calling what they deployed a product would be far too generous. Many more startups are routinely raising over $100 million under much the same conditions, some of which include the most obvious examples of snake oil I've seen in recent memory.

The reality behind these investments today is that the "Good Ole Boys" network is alive and well. By the numbers, most investors would rather invest in the obvious snake oil they know, even if the person is the AI Bro equivalent of Bernie Madoff, than deal with anyone they don't have a personal history with. Tribalism hasn't been much of an investment strategy for perhaps 2,000 years or more, yet it not only persists, it thrives.

The response rate I've personally observed is virtually 100% when you have someone on the insider circuit in your executive team who makes the connection, and around 2% if you merely reach out to investors you have 2^nd^ degree connections with. "AI Investors" are also the least responsive, which helps to explain why the average AI investment flows directly into snake oil.

There are worse things than bankruptcy, and both the snake oil sellers and their investors have that to look forward to. If someone tells you that they're going to give an LLM reasoning, explainability, transparency, alignment, ethics, or cybersecurity, picture how they'll look in prison, then decide if you want to be their cellmate.

Far more advanced and capable technology than trashbots has been demonstrated, and the world may begin to change rather quickly once that technology hits commercial deployment. I very much look forward to shifting gears back to focusing on those systems once a competent and/or ethical investor is located.