For those who’re constructing an early-stage startup and making an attempt to lift enterprise capital {dollars} to gasoline your massive concepts — concentrate on fixing a particular downside, ensure you have robust conviction, and suppose exhausting about distribution within the age of AI.
These had been some ideas shared throughout a current Seattle AI Week panel dialogue I moderated with Kellan Carter, founding common accomplice at Bellevue, Wash.-based agency Fuse, and Rohan D’Souza, CEO and co-founder at Seattle-based healthcare advantages startup Avante.
The pair know one another nicely. Fuse led Avante’s $10 million seed spherical in late 2023, earlier than the corporate was producing significant income.
Carter initially met D’Souza a number of years earlier. “There’s a lot belief that had been constructed,” Carter stated, reflecting the significance of relationship-building between founders and VCs.
The title of the panel dialogue, hosted by Seattle VC agency Ascend, was “The New Sequence A Panorama” — a nod to shifting expectations within the AI increase.
The median Sequence A spherical in Q1 of this 12 months was $7.9 million, in accordance with Carta. However there have been additionally 9 firms that raised greater than $200 million for his or her Sequence A rounds in Q3, in accordance with CB Insights.
“The variance for Sequence A is wider than ever,” Carter stated.
For these firms elevating huge Sequence A rounds, Carter stated it’s about “unfair perception” that creates conviction and opens doorways to capital.
“The perception is so clear it’s getting traders excited to chop that massive of a examine — as a result of the prize is so massive proper now,” Carter stated.
Enterprise funding has elevated to a 3-year excessive, largely due to AI, which accounted for 51% of all funding and 22% of offers in Q3, CB Insights reported.
Carter joked that AI is “at all times within the pitch now — even when it’s not AI.” For Fuse, assessing a pitch is about figuring out the easiest way to resolve a buyer’s downside — with or with out AI.
Carter stated traders lean towards founders who’ve area information and perceive a first- or second-priority buyer downside higher than anybody else. “They’ve perception that’s going to present them credibility in a buyer dialog,” he stated.
And in a world the place AI is shifting how software program is offered, Carter stated he’s in search of a transparent distribution benefit. “Product gained’t win,” he stated. “Distribution will win.”
He added: “We love founders which have the area expertise, which have the perception, they usually can get us tremendous excited a couple of distribution technique that’s a bit of extra intelligent or distinctive in an AI world.”
With regards to speaking about AI throughout a pitch, the dialog will differ relying on whether or not you’re speaking to a buyer or investor, in accordance with D’Souza.
He stated prospects could have “FOMO” in the case of AI — worry of lacking out — however they most likely even have “FOMU”: worry of messing up. D’Souza stated it’s the founder’s job to assist prospects perceive that it’s about “unlocking an entire new approach of productiveness.”
For traders, D’Souza stated it’s essential to indicate how AI improves margins — for instance, by rushing up buyer acquisition and onboarding.
Avante formally launched earlier this 12 months because it scales its software program product that goals to assist firms lower HR administration workload and scale back total advantages program prices.
As he thinks about elevating a Sequence A spherical of funding, D’Souza stated one benefit of bringing in recent money is that it acts as a sign to enterprise patrons — some who could also be cautious of an early stage, 20-person startup tucked away within the Pacific Northwest.
“There’s a bit of little bit of that notion of, what is going to occur if these guys go away?” he stated. “In order a founder, I’m like, OK, ought to we actually aggressively begin to pursue extra money on the steadiness sheet? To ship a transparent message out that, we’ve received much more fuel within the tank, regardless that we didn’t essentially want it.”
As for rivals, D’Souza stated founders ought to focus much less on related startups and extra on incumbents. “What are they doing to unlock a function set? And the way do you get there a lot quicker?” he stated.
Carter famous that Fuse stays away from firms which may immediately compete with the likes of Microsoft, Amazon, OpenAI, or Anthropic.
“If we predict that there’s an inkling that they’re going to launch a product and the following factor you recognize, everyone seems to be competing towards free or bundling — that’s an issue,” he stated.
D’Souza, a former product chief at healthcare automation firm Olive AI, confused the significance of transparency with traders.
“Be very clear about your timelines,” he stated. “For those who want three months or six months to actually construct out the core of your product, be extraordinarily clear about it.”
D’Souza stated Avante intentionally deliberate no recurring income for 2024, ran an early adopter program that wasn’t free, then got here out of stealth in April 2025 and transformed pilots into multi-year offers. “We created a bit of little bit of shortage and FOMO round this idea of an early adopter program,” he stated.
D’Souza additionally suggested his fellow founders to “concentrate on the one core factor that you just do 100X higher.”
