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R.I.P VCs?
startups just don’t need VCs like they used to
Amber Rhodes & Dillon Young
February 21, 2025 • Est. Reading Time: 7 minutes
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TL;DR
Is the VC-startup relationship about to fundamentally change?
Just starting out in Customer Success? We’ve got tips on how to learn 📚
One less thing to worry about, yay!
ICYMI last week: What’s up with the Musk vs. Altman feud? →
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Is the old Silicon Valley playbook washed up?
This is the classic story we know about Silicon Valley/startup world:
Person has an idea. Person meets VC. VC invests a buttload of cash. Person starts building a company. VC makes a return on their investment (maybe).
A tale as old as time!
Well, that tale might be changing thanks to AI.
A hot new trend in tech is the “tiny team” success story – featuring startups using AI instead of headcount to grow.
The upsides for these companies? Leaner teams = more efficient revenue generation. (The general rule of thumb pre-AI boom used to be that it costs $1M to generate $1M in revenue. With the lower costs of using AI, generating $1M takes a fraction of the cash.)
Plus, they don’t need VC funding as desperately as they have in the past.
This might spell good news for scrappy founders, but it’s bad news for VC investors who profit when the companies in their portfolio take off. Fewer investments = fewer opportunities to invest in the next unicorn startup.
This is a way different reality from the 2021 boom when money was a-flowing from VCs to startups.
What does this mean for tech startups?
A glass half-full prediction is that low cost and efficiency of AI will encourage more entrepreneurs to take the risk and launch new startups – and seek VC funding when they reach a certain size (a.k.a. the “old” startup playbook).
So if you have a startup idea, maybe now is the time to pursue it!
Recommended reading: A.I. Is Changing How Silicon Valley Builds Start-Ups
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🖥️ What else is happening in tech?
Did tax season just somehow get…worse? Over 6,000 IRS terminations are expected this week.
A buzzy AI wearable startup just flopped. Now these $699 gadgets will just be fancy paperweights.
Meet the January 2025 class of unicorn startups! Are they most likely to succeed? 🎓
Automate the grind with SundaySky. From onboarding to QBRs, SundaySky delivers personalized, engaging videos that drive customer engagement and retention—without the extra work. Think of it as your CS team’s secret weapon.
Okta, ZoomInfo, and Totango already use it. Shouldn’t you?
Visit sundaysky.com/cs for more details.
Getting started in customer success?
Let’s dish 🤭
NASA to all of us
Asteroid 2032 ☄️
Did you catch the news about the possible asteroid impact in 2032? Well, here’s some good news! (Maybe?!)
NASA has dropped the probability of asteroid 2024 YR4 (ominously named the ‘city-killer’) impacting Earth from 1 in 32 to 1 in 360. That’s a big change from a few days ago when it was named the most risky asteroid in the history of, well, tracking this kind of thing.
As of today, “current calculations show the chance of collision is extremely unlikely with no cause for public attention or public concern.”
Score! That’s one less unprecedented event to worry about for now.
But what am I going to do with this yard sign now?
too soon?
🫖 What's the tea?
A Delta plane crash landed – then flipped over – earlier this week while arriving in a Canadian airport. Everyone thankfully survived. Now Delta is offering passengers $30k each with no strings attached.
Whoops! The US Agriculture Department accidentally fired workers involved in the bird flu outbreak response. Now they’re trying to rehire them ASAP.
What a load of bull… 🐂 This Scottish Highland bull escaped its pen in Connecticut and now locals are reporting random cow sightings.
See you next week! 👋
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