Aug 7, 2025 - Business
AI could change seed-stage VC math
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Illustration: Aïda Amer/Axios
AI soon may revolutionize venture capital, but not in the way that many investors think.
- That was the top takeaway from an Axios conversation yesterday with Jon McNeill, the former Tesla president and Lyft COO who now runs a company creation platform called DVx.
The big picture: McNeill says that the investment math is changing for application startups, arguing that DVx now can get them to Series A with 80% less seed funding than it previously could.
- "So much now is just a couple founders plus a library of AI agents we provide that lets them build more efficiently," he explains. "They can begin to scale without first having hired teams of designers and project managers and engineers."
Why it matters: Venture capitalists traditionally seek at least 10% of a company at the outset, if not 20%, but founders might balk louder at such dilution if their capital requirements have dwindled.
- For early-stage VCs and their LPs, this might require new thinking about fund sizes and return projections.
Yes, but: We're not yet seeing this play out in the seed-stage or early-stage data.
- There's still a lot of what McNeill refers to as "cocktail party" thinking among founders, in which bigger checks double as bragging rights. VCs may quietly snicker, but they've got millions of reasons not to discourage the behavior.
- Also, this sort of downsizing is specific to the app layer. Not foundational models, which still require busloads of cash.
The bottom line: AI is huge. And also could make some things smaller.
