OpenAI CEO Confirms AI Is in a Bubble - What That Means for Investors Now
PLUS: Former EQT Ventures-backed executive building something new
Venture Radar
OpenAI CEO Confirms AI Is in a Bubble - What That Means for Investors Now
Sam Altman, CEO of OpenAI, recently made headlines by stating:
“Are we in a phase where investors as a whole are over-excited about AI? My opinion is yes.”
This is significant for several reasons. First, Altman is a central figure in the AI investment and product ecosystem, his company’s direction helps shape expectations across the market. His acknowledgment that the AI sector may be over-valued raises the question: if a founder at the center of the hype curve thinks valuations are high, what does that say about the ecosystem as a whole?
From an analytical perspective, Altman’s comment highlights a recurring pattern in technology investment cycles: when investor optimism outpaces actual delivery, the bubble for expectations forms faster than value creation. In the AI context today, hundreds of startups and large companies have received huge capital infusions, often based on projected model upside, while many remain pre-revenue, or still navigating product-market fit. That gap between valuation expectations and underlying business metrics is now being visible to insiders.
Altman took care, however, to note that his view on the bubble doesn’t negate the long-term importance of AI. In his words, even if the current investment phase is overheated, the underlying technology will remain “one of the most important things to happen in a very long time.” This positions the conversation not as a rejection of AI, but a correction of the pace and pricing of speculation around it.
For investors navigating early-stage AI now, the practical takeaway is a shift in focus: no longer simply backing “visionary technology,” but backing scalable economic fundamentals. Key indicators include: recurring revenue with strong retention, path to profitability or acceptable capital efficiency, defensible technical differentiation, and evidence of distribution or monetization traction. The era where merely being “AI-powered” unlocked large rounds is fading; the next wave favours companies with repeatable business models, real users and unit economics that scale.
There are also broader market signals. Leading institutional investors and macro-economic analysts (including central banks) have flagged “AI hype” as a risk for stock valuations and venture returns. Combined with Altman’s comment, we’re seeing a rising chorus that the market may be entering a phase of valuation compression. That means valuation multiples could drop, capital availability may tighten, and companies priced for perfection will face higher scrutiny.
This does not mean capital is gone or that all AI companies will fail. Rather, it means the bar for success is rising. For investors, the right moves now involve deeper diligence on model defensibility, early commercial traction, customer dependency, margin trajectory, and team execution. Companies that were viable in a high-hype environment may struggle in a more selective one.
Geeks of the Week
Startup Name: Dexicon
Geography: US
One-liner: AI coding tools forget everything after each session: your conventions, past solutions, team knowledge.
Founder(s) Background: Investor at AV8 Ventures ($360mil seed fund), Technical Lead at Amazon, Senior Engineering Manager at Twitch.
Thoughts:
Decoding Real Developer Signals vs. Surface Queries
Traditional coding assistants respond to discrete prompts (“write a function that does X”). Dexicon appears to focus instead on stitching together multi-turn sessions, tool states and code changes to generate insights and suggestions that reflect how a developer actually works - ideally leading to faster debug cycles and higher productivity.
Startup Name: Lapis Labs
Geography: US
One-liner: Lapis shows you how AI search engines like ChatGPT see your business, what users are asking AI for, and suggests improvements for you to rank higher.
Founder(s) Background: Head of Growth (3rd employee) at Warp ($25mil raised, backed by A-Star, Elad Gil and Sound Ventures), ML Engineer at Walmart Global Tech.
Thoughts:
Brands Are Shifting From Web SEO to AI-Driven Discovery - But Slowly
Lapis Labs sits at the front of a structural transition: consumers increasingly discover brands through AI assistants rather than Google search. Lapis positions itself as the analytics and optimization layer for this shift - helping companies benchmark how frequently and positively AI models surface them. The thesis is clear: if AI becomes the primary interface for information retrieval, then “visibility in AI models” becomes the new SEO.
Startup Name: Arcten
Geography: US
One-liner: Building Vercel for AI agents.
Founder(s) Background: AI/ML Researcher at CalTech.
Thoughts:
Infrastructure for AI Agents - a strategic necessity
Arcten positions itself as the underlying platform allowing companies to deploy AI agents into production quickly. According to their website and YC listing, they offer SDKs, edge runtime, data connectors, scaling, guardrails and analytics so that “you focus on business logic; Arcten handles the rest.” This is a compelling thesis because many companies stall in the “agent prototype” stage due to infrastructure, observability and integration bottlenecks. Arcten seeks to reduce months of build-time into minutes.
Founder(s) building in stealth
Deals of the Week
Parallel Web Systems raises US$100 million Series A at ~US$740 million valuation
US company Parallel Web Systems, founded by former Twitter CEO Parag Agrawal, raised US$100 million on 12 November 2025 in a Series A round led by Kleiner Perkins and Index Ventures, valuing the business at approximately US$740 million. The company builds APIs to enable AI agents to search the live web and integrate results into enterprise workflows.d-Matrix secures US$275 million Series C funding at ~US$2 billion valuation
AI-inference hardware startup d-Matrix announced on 14 November 2025 that it raised US$275 million in a Series C round, lifting valuation to about US$2 billion. The company focuses on next-generation inference infrastructure for enterprise and hyperscale AI.Maybern raises US$50 million Series B to build AI-OS for private funds
On 17 November 2025, fintech/AI startup Maybern raised US$50 million in a Series B round led by Battery Ventures to build an “operating system” for private investment funds, modernizing deal sourcing, portfolio monitoring and capital deployment workflows.Endolith raises US$13.5 million seed funding in US for AI-powered biomining
US biotech startup Endolith announced on 14 November 2025 that it raised US$13.5 million in seed funding. The company applies AI and microbial techniques to recover critical metals from low-grade ore, aligning with decarbonization and critical-minerals supply-chain demands.
This edition is brought to you in partnership with Stella Capital.