VCs Would Bet on Open-Source AI Over OpenAI and Anthropic | E2341
Three veteran VCs debate whether open-source or frontier AI models are better bets, and why today's seed valuations make traditional venture returns nearly impossible.
The gist
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Open-source models already handle 78% of token usage, leading most VCs to avoid funding startups built on closed models.
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Seed valuations jumped from a median of $8M in 2017 to $28M in 2026, making the math on fund returns much harder.
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A $300M fund needs $150M per exit, so a $24M seed post-money demands 30x growth, effectively requiring a decacorn outcome.
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If a good investor offers clean terms at a fair valuation, the panel says founders should take it immediately rather than wait.
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"This is really about how to donate illiquid assets — stock in a startup company, GP or LP interest in a fund, even carried interest in a fund. Instead of donating your cash, you..."
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"I would like to thank Gemini for making me graphics that I would have paid an illustrator $300 for and waited six weeks. I just made that while you were talking, Jenny."
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"This is really about how to donate illiquid assets — stock in a startup company, GP or LP interest in a fund, even carried interest in a fund. Instead of donating your cash, you..."
"Not all donor advised funds accept these assets, but UI Charitable, which we work with out of Utah, does."
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