Why AI Startups Will Not Attract Pre-Seed/Seed Investment in 2026
Date
Aug 27, 2025
Classification
- Startups
#
- Investment/Market Trends
Ed Kang
I'm a 7x founder with 2 exits
"The AI bubble is about to burst." Why 99% of startups will fail in 2026
🫑 3-Line Summary
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It warns that the AI startup investment market in 2026 will resemble the collapse of the dot-com bubble, and that 99% of companies that simply improved existing models will fail to attract initial investment.
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As investors' standards have shifted from 'Better' to 'Different,' you must avoid red oceans like chatbots or coding agents and take a fundamentally new approach to survive.
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If you are currently struggling to attract funding, instead of viewing this as a setback, shift your perspective to an unexpected blue ocean and seize it as an opportunity to disrupt the market.
🥦 Insight
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Don't look for a 'faster horse,' make a 'car.'
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If you look at the current startup scene, everyone is shouting, "We are more accurate than ChatGPT" or "We have more features than Notion." But to be blunt, that is like trying to build a "Faster Horse." Making something 10% better in a market where giant tech companies are already doing well is ultimately a path to being eaten by them or withering away.
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Investors in 2026 want 'justice,' not 'improvement.' Instead of improving existing chatbots, we must consider 'chat-free customer service,' and instead of creating better resume analyzers, we must imagine 'recruitment without resumes.'
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Open your IR materials again. Do you happen to see a competitor's slide plastered with a Big Tech logo claiming, "We are cheaper and faster"? If so, tear that slide up. Instead, try bringing out a niche that no one is looking at, or some eccentric idea that makes you think, "That doesn't make sense." Because right now, "crazy thinking" will be the only survival strategy.
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