At TechCrunch’s StrictlyVC event in Athens this week, I sat down with Verdict Capital’s Niko Bonatsos, Threshold Ventures’ Andreas Stavropoulos, and Atomico’s Ben Blume to ask them about the current state of venture investing, the wave of massive IPOs SpaceX is about to launch, and where they still see a sea of opportunity. The following conversation has been edited for length and clarity. You can see the full discussion at the bottom of the page.
With SpaceX expecting a $1.75 trillion valuation in its IPO, and OpenAI and Anthropic potentially not far behind, what will be the impact on the broader market?
Andreas Stavropoulos: I remember how exciting the Google IPO was and how it was a revitalizing event that ushered in a whole new generation of entrepreneurs, leading to a resurgence in a market that had been very pessimistic about technology in the early 2000s. The same thing is happening now. With every subsequent wave of paradigm shift, the scale changes by orders of magnitude, and this is to be expected. In today’s information age, what business is not a technology business?
Ben Bloom: These are phenomenal companies, and each liquidity event of this magnitude generates wealth and profits that are passed on to the next generation of companies.
Nico Bonatos: The co-founders of Verdict were the first investors in what is now known as Cursor. So if Elon feels like he’s having a good moment, there’s probably also good news for Cursor (which Musk recently revealed he has an option to acquire for $60 billion). But more broadly speaking, as Andreas mentioned, for the next generation of companies, they could be targeting a much larger market. As we know, immigrant entrepreneurs are people who dream really big, have nothing to lose and can go far. Elon Musk is an immigrant entrepreneur. So for those of us coming from Greece or other small markets, this is a great example.
Some have suggested that SpaceX’s valuation could absorb too much public market capital, hurting the company accordingly. Is that really something to worry about?
Stavropoulos: You can choose to look at most situations either optimistically or pessimistically, and you can make very good arguments for both. On a macro level, something like SpaceX will bring more people into the market than have the short-term impact of soaking up liquidity. Over the past 30 years, consumer participation in the marketplace has gone from a trivial task to something people transact every day on their mobile phones. Those numbers add up.
Blume: SpaceX is one such company. For a long time, space was the domain of governments and the public sector. I think providing investors with real financial access will spark a broad imagination. Mentally it could come from a long tail allocation that could be put into the next 20 or 30 software businesses, but I think it generates more interest than it compensates for.
Is the current flood of capital into AI justified by future returns, or is it a case of extreme FOMO?
Bonatos: If you are an AI-driven startup or a company currently in the dynamic space in the US, life can be fast-paced. If you don’t fall into one of these two buckets, it’s really hard. In 17 years in Silicon Valley, I have never seen groupthink. Three-quarters of all venture capital raised last year was invested in five companies. Today, if you’re a 40-year-old tenured professor at Stanford who isn’t building something with AI, no one will want to meet you.
That means something real is changing. Two founders using today’s AI tools can make more progress in two months with one round of funding than it took 10 people, two rounds, and a year of work a year ago. This is changing the way businesses get started and how they leverage their assets. You could potentially go straight from pre-seed to Series B.
Stavropoulos: There will be a correction that pushes some capital out of the market. Commitment and optimism are still far ahead of the short- and medium-term ability to show results. But I don’t think we’re overly optimistic from a long-term macro perspective. The problem is that we shouldn’t delude ourselves into thinking that every 19-year-old with an idea will grow up to be the next generation of talent.
How do you actually price a deal when things move this quickly?
Blume: The best entrepreneurs have no shortage of capital options. You need to think about what a meaningful ownership stake in your fund is, and walk away when you can’t get there. The interesting dynamic is that we are a $500 million fund that is seeing the same opportunities as people investing in a $10 billion or $15 billion fund. The incremental value of a dollar for us and them is very different. This skews round sizes and makes it difficult for offers to stack similarly.
Bonatos: We basically invest our first money instead of our friends, family or angels. We invest in what I call “monsters” – individuals who, like in professional sports, break all records that are held by a small number of people. As the day progresses, they learn and mature, making progress that would take an average smart founder a whole week. Most of the founders we’ve supported so far are working in markets that don’t yet have a name. This is why valuations are low. Large asset managers can’t tell their teams to find companies in markets that don’t yet exist.
There are many stories of very young founders receiving term sheets almost as soon as they arrive. Is age really a proxy for meaningful work right now?
Stavropoulos: Lack of experience is especially advantageous in times of turmoil, when the world seems to be changing in fundamental ways. Experience can actually lead you in the wrong direction. That doesn’t mean it’s changed forever. We are going through a phase where things are not yet stable, which creates fertile ground for new ideas and young entrepreneurs in general. But I don’t want to overgeneralize.
Bonatos: The same thing happened when I came to Stanford as a graduate student in 2009. The iPhone has been around for two years, the App Store has been around for a year, and there was a time when there were more VCs on campus than students. Today is again one of those special moments. If you’re 22 years old in San Francisco and building something with AI, you might have a seed term sheet in your inbox. But if you’re 19, oh my gosh, that means you’re amazing (laughs). You may already have a Series A (offering). And at this point, age is all relative. I spoke to the 24-year-old founder here in Athens this week. I meant it when I said he wasn’t that young. I met the Mercor kids when they were 19, and look where they are now.
Blume: If you try to generalize from age, I think you’re missing what you actually want. An extremely high level of strength, the ability to stay ahead of the speed at which the markets move, and the mental agility to adapt to a constantly changing environment. Those things are more important than the age on your passport.
What do you think about the strange behavior we’re seeing around metrics, especially the way companies report annual recurring revenue (ARR)?
Blume: People are relatively free about how they define A, R, and R. New pricing models (token-based charging, free tokens calculated as revenue) create different ways to express these numbers. Our job as investors is to overcome this and make decisions based on real truth. Is it okay from a marketing perspective? maybe. Is it okay to decide which companies get capital? no. However, experienced investors can usually get by.
Bonatos: Sometimes I get emails from portfolio companies with very high ARR numbers, but I can’t quite remember, so I’ll contact the founder. What is the answer? Because the campaign was a hit, we made 365 times what we made the day before. I asked him could you please use it at least quarterly? Whenever a lot of money chases a particular topic, some people are happy to do so for short-term gain.
In ventures, a bad investment can only result in you losing money once, but the right investment can return you 100x the return. So just ignore the bad actors and move on.
Aspiring entrepreneurs in the audience, where do you really see a gap right now?
Bonatos: All VC firms had more than half of their partners conducting consumer internet investments. Today, perhaps only half remain. They left the scene completely. However, in the past few years, OpenAI, one of the leading AI companies, has become huge thanks to ChatGPT. Consumers are coming back, and that’s almost a crazy statement to make. Today, those founders have about five investors who could participate in the first or second round. We believe there is also a new movement emerging that will help restore the American dream through new consumer fintech ideas.
Blume: The opportunities for AI interacting with the real world are far greater than what we have seen so far in workflow automation and digital processes. The physical world still forms a large part of the economy. Betting on all forms of robotics, not just somersaulting humanoids, remains one of the biggest open spaces for the next decade.
If you’d like to hear more about the trio’s thoughts, including whether Stanford University has become too familiar with the venture capital industry, check out the full conversation below.
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