--- title: "Even Tech Investors Are Getting Sick of All These AI Startups With Weak Ideas" description: "Venture capitalists are increasingly turning away from superficial AI-wrapped startups to more sophisticated AI agents." date: "2026-03-05" modified: "2026-03-05" authors: - name: "Joe Wilkins" job_title: "Correspondent" link: "https://futurism.com/authors/jwilkins" url: "https://futurism.com/artificial-intelligence/ai-startups-investor-funding" categories: - "Artificial Intelligence" - "Finance" - "Future Society" - "Investing" --- # Even Tech Investors Are Getting Sick of All These AI Startups With Weak Ideas ![A man sits alone in a room filled with empty chairs, resting his head on his hand with a contemplative or tired expression. In the foreground, a person in a suit extends an open hand toward the seated man. The background is a bold orange with a large yellow circle behind the seated man, creating a dramatic and stylized contrast. The image has a textured, almost halftone effect.]() *Illustration by Tag Hartman-Simkins / Futurism. Source: Getty Images* If the whole "AI-startup to billion-dollar tech giant" pipeline is wearing you thin, you're not alone. As it turns out, even the guys lavishing tech entrepreneurs with billions of dollars in venture capital funding are getting sick of the AI schtick. That's [courtesy of *TechCrunch*](), which interviewed a number of investors at venture capital firms — the early-investors who try to turn young, risky companies into long-term hits. According to AltarR Capital founder and managing partner Igor Ryabenky, investors are now avoiding companies that use AI like a magic catch-all. "If your differentiation lives mostly in UI \[user interface\] and automation, that's no longer enough," Ryabenky told *TC*. "The barrier to entry has dropped, which makes building a real moat much harder." Sure enough, with the rise of vibe coding, everyone and their grandma has been able to jump aboard the AI-hype train. It's no longer enough to offer a flashy AI concept; in Ryabenky's words, the challenge is to build an AI service around "real workflow ownership and a clear understanding of the problem from day one." "Generic productivity tools, project management software, basic CRM clones, and thin AI wrappers built on top of existing APIs fall into this category," the investor continued. "If the product is mostly an interface layer without deep integration, proprietary data, or embedded process knowledge, strong AI-native teams can rebuild it quickly. That is what makes investors cautious." This view is echoed by Emergence Capital partner Jake Saper, who told *TC* the difference can be found in observing Cursor and Claude Code — the former which he says focuses on form for the sake of human users, rather than raw function. As AI agents become more popular, Saper suggests, investors are chasing the latter. "One owns the developer's workflow, the other just executes the task," he said, referring to Cursor and Claude Code, respectively. "Developers are increasingly choosing the execution over process." The shift in sentiment from investors comes as midweight software as a service (SaaS) companies have faced [immense struggles]() with fundraising and valuations. Part of that might be a consequence of the kind of [valuation inflation]() that's become rampant in the AI startup space over the past year. But with [agentic AI hype]() on the rise, it could just be that the young companies hawking glorified chatbots will already have to make way for a new, slightly shinier industry fad. **More on startups:** *[Man Letting AI Rent Human Bodies Says Elon Musk Is His Hero]()* ## Author At Futurism, I focus on the intersection of technology and power — examining the economics, history, and politics behind today’s dystopian headlines. As a writer, I’m interested in topics ranging from AI’s impact on labor to startups nobody asked for. My prior work includes bylines in Jacobin, Verso, and Blue Labyrinths. My work for Futurism has been cited by publications including Forbes, The Guardian, MIT Technology Review, Time, The Nation, Mother Jones, The Verge, and Wired. I grew up in Michigan, attending Central Michigan University as well as Ball State University, where I earned a master of music. I now live in Brooklyn with my girlfriend and our cat Ziti. On weekends, you can find me hunched over a cold pint arguing geopolitics with the other transplants. ### Author social links [Bluesky]()