AI Is No Longer Just Building Companies – It’s Funding Them
The AI bubble everyone’s arguing about just got a new warning sign.
Listen to the audio version of this article (generated by AI).
Hello, Reader.
“We decided yesterday not to take this to the next level.”
“While this sounds interesting, it is not something we would do here.”
“We’ve had the chance to discuss internally, and unfortunately don’t think that it’s the right opportunity from an investment perspective.”
Those are just a few of the rejection emails Airbnb Inc. (ABNB) CEO Brian Chesky received in 2008 when seeking initial funding for the travel services company.
Funding is critical for companies because it provides the cash they need to grow. And after years of hearing “no,” Airbnb eventually raised $1.5 billion in 2015. The company was able to accelerate its global expansion, marketing, and new travel offerings before its IPO in 2020.
Nearly two decades later, securing funding is still one of the hardest parts of building a business. That’s because no two fundraising processes look exactly alike.
But if it’s an AI company looking for funding, investors are willing to throw money at it.
For example, Lyzr Inc., a New York-based AI startup, recently raised $100 million. But it’s not the amount that makes Lyzr interesting; it’s how it raised the money.
It used one of its own AI agents to do it.
In today’s Smart Money, let’s explore why this seemingly small story could have big implications for investors… and what it means for the “Agentic Reckoning” to come.
The AI That Pitched Itself
First, let’s take a look at Lyzr Inc.
The company builds AI agents – autonomous software systems that can complete complex tasks with minimal human supervision. More importantly, Lyzr enables other companies, including consulting firm Accenture plc (ACN), to build and test AI agents within their own organizations.
When it came time to raise capital, Lyzr turned one of its agents “on” to streamline the process.
Its AI agent, SivaClaw, helped manage the company’s $100 million Series B fundraising process by taking over many of the repetitive, time-consuming tasks. It drafted investment memos, communicated with more than 130 prospective investors, and automatically answered many of their initial questions.
SivaClaw also tracked how investors interacted with Lyzr’s pitch deck – monitoring which slides they spent the most time viewing – to help the founders identify what topics generated the most interest, or confusion.
And because the round attracted about $400 million of interest for a $100 million target, the company used the agent to help determine which investors were the best strategic fit.
“It just sped up our fundraising process,” said Siva Surendira, Lyzr’s co-founder and namesake of the AI agent.
That speed matters because fundraising is one of the least structured workflows in business. Every investor asks different questions, wants different information, and requires repeated follow-up. By automating much of that administrative work, SivaClaw allowed the founders to focus on what humans still do best: tell their story, build relationships, and negotiate terms.
It’s important to note that Lyzr’s AI only assisted with fundraising. Investors still evaluated the company and made the investment decisions.
When Raising Billions Gets Easier
Now, the $100 million Lyzr raised is just pennies compared to Anthropic and OpenAI.
Anthropic – the creator of the “Claude” AI assistant – recently closed a funding round valuing the company at nearly $1 trillion, having risen more than fifteenfold in just over a year. OpenAI, the creator of ChatGPT, is sporting a similar valuation. That company recently raised capital at 72 times annual sales.
Let’s also consider Space Exploration Technologies Corp.’s (SPCX), Elon Musk’s data-center-in-space enterprise, $1.8 trillion valuation after it went public.
Within its first week of trading, the stock rocketed 67% to a breathtaking market cap of nearly $3 trillion – or 160 times revenues. That’s not a valuation; that’s a theological statement. These three companies are collectively worth something in the neighborhood of $4 trillion.
If Agentic AI makes it dramatically easier to funnel money into an industry that’s already spending at unprecedented levels, investors should ask an uncomfortable question: Has AI just made the next AI bubble even easier to inflate?
Investing in Agentic AI’s Impact
I’m not suggesting this outcome is inevitable. But it is a fascinating development that deserves attention: AI is now helping finance the next wave of AI.
And fundraising is just one of the many areas Agentic AI is beginning to reshape.
We saw an early glimpse of this during the “SaaSpocalypse” selloff earlier this year, when investors began reassessing how vulnerable certain software businesses could be to Agentic AI.
Agentic AI’s reckoning has severe implications from the labor market to the broader economy. Companies disrupted by Agentic AI could see their stocks fall sharply, with the panic spreading well beyond the tech sector.
Widespread adoption of Agentic AI could trigger a market-wide selloff similar to past technology-driven crashes.
I explore these risks – and the investment opportunities they may create – in my Agentic Reckoning broadcast.
History rewards investors who recognize transformative shifts before everyone else. But the biggest risk isn’t always investing in a disruptive technology; it’s failing to recognize just how disruptive it can become.
Regards,
Eric Fry