Investors warn of frothy Series A market and outline path for founders

At this year’s TechCrunch Disrupt, a panel of three investors broke down what it takes to secure a Series A in a market they described as unusually volatile. Managing Director Shailendra Singh of Peak XV, Index Ventures partner Jahanvi Sardana, and Bessemer partner Janelle Teng Wade warned that the current fundraising environment is “the hardest to raise in that I have seen,” and offered a roadmap for founders aiming to break through.

Singh emphasized that the burden on founders has risen dramatically. He noted that companies now often pitch a single round with three distinct price points, a symptom he called “market froth.” Sardana echoed the sentiment, coining the term “tranchopalooza” to describe the practice of splitting rounds into multiple tranches, each with its own terms. The dispersion of capital, valuation, and conditions, according to the panel, makes it difficult for founders to convince top-tier firms that they belong among the few “special” companies that can truly scale.

Beyond the cautionary tone, the investors outlined the core ingredients they look for in a Series A pitch. First, a compelling narrative that convinces investors the founder can build a large-scale business. Singh added that founders who can attract top-tier talent enjoy a distinct advantage. The sector focus, according to Teng Wade, currently leans toward defense, robotics, and AI infrastructure. She observed that foundational-model companies are moving toward vertical integration, yet opportunities remain for newcomers such as “neo-clouds” that lease AI compute and “neo-labs” dedicated to AI research.

Metrics still matter, but the panel agreed they are less prescriptive than in previous cycles, especially for AI-heavy startups where compute costs can eclipse revenue. Teng Wade cited her firm’s early evaluation of Anthropic, which at the time posted negative margins and heavy compute spend. One partner on her team believed that even with loss-making margins, the sheer size of the AI market could justify a premium price for frontier models, a view vindicated by Anthropic’s recent move toward an IPO at a valuation near $2 trillion and its claim of adjusted profitability.

Honesty, the panelists said, is a non-negotiable credential. Singh warned that presenting cumulative revenue or ARR charts is a “massive red flag,” indicating that a company is masking weak time-series data. He described the current landscape as full of “false positives,” noting that such optimism is rare in two decades and likely to trigger a correction by 2027.

When pressed for final advice, Singh reminded founders that building a company is “excruciatingly difficult” and urged them to endure the struggle without compromising on product-market fit. Sardana cautioned against letting funding trends dictate product decisions, describing that mindset as “scary.” Teng Wade, shifting from her usual conservative stance, encouraged founders to be bold in their asks and adjust based on market response.

The panel’s consensus points to a near-term tightening of capital, especially for AI-centric ventures, while still leaving room for ambitious founders who can demonstrate strong talent, clear storytelling, and transparent metrics. As investors brace for a potential 2027 correction, the onus is on founders to balance audacity with honesty, positioning themselves for the next wave of sustainable growth.