VC 'Kingmaking' in AI is a Liquidity-Driven Gamble, Risks Startup Failure
arian_ghashghai · x · 2026-08-10
The recent VC narrative that only 20 AI companies matter and deserve unconditional funding is antithetical to venture capital's true mission and lacks historical precedent, argues the author.
This 'kingmaking' approach attempts to speedrun company growth through massive upfront capital. However, data suggests that overfunding startups before product-market fit (PMF) often leads to failure. Driven by a liquidity crisis, VCs are using this narrative to inflate private stock demand, enabling early exits via secondary markets. The author criticizes this shift from long-term innovation investing to opaque stock trading and speculation.
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