One of the challenges of the venture market today is that, for almost every net new opportunity, there are 30 competitors chasing it. Beyond taking on product-market fit and execution risk, these companies face immense competitive pressure. And given how quickly startups are raising capital, many of those competitors are also well-capitalized.
A zero-sum thinker might argue that the market is doing itself a disservice by funding a bunch of companies that will inevitably compete head-to-head, potentially eroding each other's margins and returns.
Alternatively, you could take a more abundance-oriented view. We're witnessing a fundamental shift in the world order. The TAM for these emerging businesses is enormous, to say the least, and there's plenty of room for AI-native companies to capture meaningful value.
One of the hard things, though, is that all the money in the system distorts things. A lot of traction might be coming from fundamentally unsustainable sources of money, meaning that what might look like PMF or strong margins is more the result of a short-term dislocation than a market steady state.