One of the best parts of YC Demo Day is catching up with VCs you haven’t seen in a while. And this time I several sobering conversations with top VCs that made it clear:
Many VCs have now just quietly given up on their slow-growth portfolio companies.
Especially the ones at $50m, $100m+ ARR that are now growing sub-20%, even sub-10%.
The reasoning? They’ve been hoping for growth to reaccelerate these past 2+ years, and now feel they need to focus 100% of their bandwidth on their “go-forward AI portfolio.”
It’s bleak. It’s pragmatic. And it’s the reality in an AI-first world.
The New VC Math: AI or Bust
Here’s what multiple VCs told me:
“Look, we gave these companies 24+ months to learn, adjust, and reboot. If they haven’t figured it out by now, it’s just tough. Our LPs want to see hypergrowth AI investments, not zombie SaaS companies burning through runway at 10% growth.”
The conversation usually ended with some variation of: “Consolidation is the only outcome for most $100M+ pre-AI B2B companies.”
Ouch.
But it might be exactly the final catalyst you need.
Why This Might Be the Best Thing That Ever Happened to You
First, let’s be real about what “VC support” actually meant for many of these companies.
I’ve seen too many founders mistake VC hand-holding for actual business building. When your investors are constantly available for “strategic guidance” and follow-on funding discussions, it’s easy to lose sight of the fundamentals:
- Building a product customers actually can’t live without
- Creating efficient, repeatable sales processes
- Achieving genuine product-market fit (not just “good enough” fit)
- Developing sustainable unit economics
Second, VC abandonment forces brutal prioritization.
When you know there’s no safety net, you stop playing it safe. You can’t afford to run 47 experiments simultaneously or chase every shiny growth hack. You focus on what actually moves the needle.
Third, it eliminates the “growth at all costs” pressure that may have been killing you slowly and/or forcing bad decisions.
Without VCs pushing for hockey stick growth, you can focus on building a sustainable, profitable business. Or at least, doing what it really takes to reboot your company so it really can get back to growth.
The Playbook for VC-Abandoned Companies (That Actually Works)
1. Embrace the Never Raise Again Mentality
Assume you can never raise again. Start with these fundamentals:
Audit every dollar. I mean every dollar. That $50K/month in “growth tools” you’re not actually using? Gone. The 12-person marketing team generating 30 qualified leads per month? Time for some hard conversations.
Focus on cash flow, not only growth metrics. At least, until growth gets back to venture rates. Your new North Star isn’t ARR growth—it’s cash flow positive. This mindset shift alone will transform how you make decisions.
2. Double Down on Your Best Customers
Forget about TAM expansion and new market penetration. Your survival depends on the customers you already have.
Conduct deep customer interviews. Not NPS surveys—actual conversations. Find out what they’d be willing to pay 2x for. What features would make your product indispensable?
Build retention into everything. Every product decision, every customer success initiative, every pricing change should be evaluated through one lens: Does this make it harder for customers to leave?
3. And Also … Refound Your Startup for the AI Age
This isn’t about slapping “AI-powered” onto your existing product. It’s about fundamentally rethinking your business through the lens of what’s actually possible now.
Identify your “AI-native” opportunities. Where in your current workflow could AI eliminate entire job functions? Not just “make things faster”—actually eliminate the need for human intervention entirely.
Rebuild core processes with AI at the center. Customer support, sales qualification, onboarding, data analysis—what would these look like if you built them from scratch today with current AI capabilities?
Create the AI-first product your customers really want. Even if it cannibalizes your base.
Your Unfair Advantage: You Know How to Make Your 100s and 1000s Of Customers Successful
You can build what the new AI kids have, if you really want. Did they invent their own LLMs? No. Do they have your installed base? No.
Go copy them and do better.
You have real customers and customer feedback loops. You know what features actually drive retention vs. what sounds good in a pitch deck.
This customer base is incredibly valuable—and it’s exactly what most AI start-ups lack.
Don’t Waste This Crisis
Almost every successful B2B company has at least one “near-death” moment that forced them to get serious about the fundamentals. This might be yours.
Use this pressure to make decisions you should have made years ago. Cut the underperforming segments. Simplify your product. Focus on your best customers.
Use this time to build something your customers would buy again today.
Use this opportunity to prove you can build a real business for the AI age. No more pretend. No more lame co-pilots just to check a box.
Prove Them Wrong
Your VCs giving up on you isn’t a failure—it’s pragmatism and as annoying as it may be, you need to move on.
Focus on building a business instead of building a story for investors. Make decisions based on what’s best for your customers and your business, not what looks good in a board deck.
Don’t let your VCs’ lack of imagination limit yours. The best revenge is building a business so successful they regret giving up on you.
Now get back to work. You have a business to save—and a point to prove.
