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The Best VC Opportunity of My Career

Over my near decade career in VC, I've gotten the same question countless times: "Should I become a VC?" My typical response has always been —there are definitely easier ways to make money, both in finance and beyond. 

The time to liquidity is painfully long, and success depends on juggling so many moving parts: finding and investing in the outliers, capital raising, macro cyclicality, legal work and regulations, LP management, and more. I've always felt that areas like private equity, hedge funds, investment banking, or being an employee at a fast-growing startup are far easier paths to financial success. But something has fundamentally changed for me. Despite my relatively short VC career, this feels like the best time (in my career) to be in venture capital.

AI: Reshaping the Tech Stack

Artificial intelligence, machine learning, and emerging fields like quantum computing are reimagining the entire tech stack. AI is now foundational—like electricity or the internet—permeating everything from software development to enterprise operations and consumer experiences. The modern AI stack spans compute, data, models, and observability, enabling new capabilities at unprecedented scale. It’s my version of the internet era on steroids. 

Beyond software, AI is revolutionizing entire industries: accelerating drug discovery from decades to years, enabling fully autonomous vehicles, powering humanoid robots that can perform complex physical tasks, and transforming manufacturing through intelligent automation.

These technologies are not just incremental improvements but are redefining what's possible, from generative AI that creates code, music, and video to quantum systems poised to solve previously intractable problems.

Marc Andreessen has stated that AI will replace the entire tech stack—meaning every software layer and function will be reimagined or rebuilt with AI at its core. He famously quipped in 2025 that AI may eventually replace most jobs, but not venture capital, highlighting the unique human element in VC judgment. However, his broader point is that AI is not just a tool but the new substrate for all technology, leading to a scale of outcomes we've never seen.

Speed and Scale of Outcomes

The speed at which AI companies are scaling is unlike anything seen before. For example:

• Anthropic: Anthropic went from $0 to about $4B+ ARR in around 3 years. This scale of investment and capability development is unprecedented.

• Mercor: Founded by three 21-year-olds, Mercor reached a $2 billion valuation and $100 million annual revenue run rate within two years. Its monthly growth rates have exceeded 40%, with some months nearing 90%. This is one of the fastest journeys from $1 million to $100 million in startup history.

• Anysphere (Cursor): The company behind Cursor, an AI-powered code editor, raised $900 million in 2025, reaching a $9.9 billion valuation. Cursor is generating nearly a billion lines of code daily and has seen annual recurring revenue (ARR) double every two months, reaching $500 million ARR. Adoption by major tech firms like Stripe, OpenAI, and Spotify underscores its rapid market penetration.

• And many others like them. 

These companies are not just growing fast—they are creating entirely new categories and redefining productivity, recruitment, and software development. The velocity of product adoption, revenue growth, and technological advancement is unmatched in previous eras.

Additionally, the scale we're witnessing is something we've never seen before. The unicorn ($1B) used to be the benchmark for startup success, then decacorn ($10B), but increasingly it feels like $100B could become the new benchmark for the single outlier company every year. OpenAI is reportedly valued at around $300B, Anthropic is now raising at $150B+ and all are growing rapidly. 

There are legitimate concerns about this trajectory: questions around the defensibility of long-term revenues, whether foundational models will disintermediate application-layer companies, potential commoditization of the model layer, and whether this echoes the speculative exuberance of 2021. Having invested through that period, I recognize the similarities—yet something about today's landscape feels fundamentally different. The underlying technology shift appears more substantial, the productivity gains more tangible, and the market opportunities more expansive. For investors who understand how to navigate these dynamics, the current moment offers a lot of excitement, but also strong risk management as bubbles are unquestionably forming in some areas. 

Robust Secondary Markets: Liquidity Without IPOs or M&A

Traditional exits like IPOs and M&A have become less frequent, albeit have turned strong as of late, but the secondary market for private company shares has exploded. In 2024, global secondary transaction volume hit a record $162 billion, up nearly 45% from the previous year. 

The total addressable market for venture secondaries is expected to exceed $120 billion in 2025.

Secondary transactions allow founders, employees, and early investors to sell their shares to new investors before a company goes public or is acquired. This provides liquidity without requiring a full exit event. For VCs, secondaries offer several advantages:

• Generating liquidity: VCs can return capital to LPs and demonstrate performance

• Accessing opportunities: VCs can buy into promising companies they missed in earlier rounds

• Active portfolio management: VCs can rebalance or exit positions as needed

Funds like StepStone and Lexington Partners, as well as brokers and syndicators, are driving this liquidity. StepStone's latest venture secondaries fund raised $3.3 billion, a record for this strategy. Secondary transactions are now seen as a critical tool for managing fund lifecycles and LP expectations, and are no longer stigmatized as a sign of weakness.

A major concern over the past few years has been how investors get distributions (DPI) when companies remain private for 10, 15, or even 20+ years, in the case of SpaceX. However, this challenge becomes somewhat less relevant with the emergence of robust liquid secondary markets for top-tier companies. We still need these markets to get more robust believe it or not, with more players competing against the Stepstone’s, Lexington’s, GICs & more. 

Capital Efficiency: Unprecedented Outcomes with Less Capital

Companies in our portfolio are reaching tens of millions in ARR on just one a few million raised.

This level of capital efficiency is extremely rare in historical terms. In previous cycles, startups often required multiple funding rounds to cross meaningful revenue thresholds, but today's best companies are achieving rapid scale with far less dilution and burn. This trend is supported by a broader industry shift toward disciplined spending and a focus on unit economics, especially as investors scrutinize burn rates and demand clearer paths to profitability.

Sam Altman, CEO of OpenAI, has predicted that we will soon see companies with just a handful of employees—or even a single founder—reach billion-dollar valuations. He has said, "We're going to see 10-person companies with billion-dollar valuations pretty soon," and even speculated about the possibility of a one-person unicorn. While this may not have happened yet, the vision is rooted in the leverage that AI and automation provide, enabling individuals to operate at the scale of entire teams.

"There's this betting pool for the first year there is a one-person billion-dollar company, which would've been unimaginable without AI. And now [it] will happen."
—Sam Altman

Why This Matters for Venture Capital: Historically, startups have suffered massive dilution on their journey from pre-seed to IPO. A typical startup might give up 15-25% in pre-seed, another 20-25% in Series A, 15-20% in Series B, and so on—often ending with founders holding single-digit percentages by the time they go public. By IPO, it's common for founders to own less than 5-10% of their company after multiple funding rounds.

But today's capital-efficient AI companies are rewriting this playbook entirely. When companies can reach $20 million ARR on just one Seed round, founders retain significantly more ownership. Instead of diluting through 6-8 funding rounds, the best companies can achieve massive scale with 1-3 rounds and at significantly higher valuations. 

This isn't just better for founders—it's transformational for early investors. When portfolio companies require less capital to reach the same milestones, our ownership percentages stay higher, and our returns multiply accordingly. We're seeing unprecedented capital efficiency create a win-win: founders keep more of their companies, and early VCs generate outsized returns on smaller initial investments.

Enhanced QSBS Benefits: Keep More of Your VC Returns 

The One Big Beautiful Bill Act (OBBBA), signed into law in 2025, has improved the economics of venture investing through dramatically expanded Qualified Small Business Stock (QSBS) benefits. For venture capital, these changes represent a meaningful shift in after-tax returns. 

The introduction of tiered exclusions—50% for 3-year holds, 75% for 4-year holds, and 100% for 5-year holds—eliminates the previous all-or-nothing five-year requirement that often conflicted with fund lifecycles and exit timing. This flexibility is particularly valuable for venture funds, which typically operate on 7-10 year cycles and may need to distribute earlier than the original five-year mandate allowed.

The increased exclusion cap from $10 million to $15 million per taxpayer per issuer, coupled with the higher $75 million gross asset threshold for company eligibility, dramatically expands the universe of venture-backed companies that can provide meaningful QSBS benefits. For venture partners and investors, this means significantly higher after-tax returns on successful exits, with the potential to exclude millions more in capital gains from federal taxation. 

Given that venture returns are highly concentrated in a small number of outlier investments, these enhanced QSBS benefits can materially impact investor net returns, making venture capital an even more attractive asset class for high-net-worth individuals and family offices seeking tax-efficient growth opportunities.

Excited, but Still Cautious 

While I'm genuinely optimistic, the contrarian arguments deserve serious consideration. Current AI company valuations trade at 50-100x revenue multiples, compared to historical SaaS benchmarks of 10-20x. This represents a valuation premium that may be unsustainable once growth rates normalize.

More concerning is the unit economics reality that many are choosing to ignore. Recent analysis suggests 73% of AI startups still lack clear paths to profitability beyond subsidized growth models. Even supposed success stories raise questions—OpenAI reportedly burns over $8B annually with some claiming AI standout Cursor is operating at negative gross margins. If some of the most successful AI companies today have negative unit economics, what does that say about the broader ecosystem?

The historical parallel to 1999 is fair. Just as every company needed a ".com" strategy then, every startup today needs an "AI strategy." The fundamental question remains: How many of these AI-native companies are building defensible moats versus riding a temporary wave of technological novelty?

Respected investors are raising red flags. Benchmark's Bill Gurley recently warned that current AI investing "feels like 2021 growth-at-any-cost revisited, but with better marketing." Sequoia's internal analysis suggests that 80% of current AI startups will become obsolete within 3-4 years as foundation models continue improving. 

This is still venture capital—a game of power laws where a few massive winners must compensate for many failures, requiring the same disciplined approach to portfolio construction and risk management.

If you enjoyed this article, feel free to view our prior posts on adjacent topics 

• Why Syndicate Leads Don’t Survive 

• The Syndicate LP Churn Problem 

• What Really Drives Investment Interest in SPVs

Last Money in is Powered by Sydecar

Sydecar empowers syndicate leads to manage their investments more effectively. Organize, manage, and engage your investor network effortlessly with Sydecar’s management and communication tools. Their platform also automates banking, compliance, contracts, tax, and reporting, freeing up syndicate leads to focus on securing deals and strengthening investor relations. Elevate your syndicate operations with Sydecar.

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✍️ Written by Zachary and Alex