Venture capital investors are becoming increasingly selective in the current market, even as deal sizes grow, according to insights shared at TechCrunch Disrupt. The evolving landscape, heavily influenced by the rise of artificial intelligence, demands that startups demonstrate clear defensibility and consistent growth to secure Series A funding.

Thomas Green of Insight Partners highlighted a trend of fewer rounds being funded, but with larger sums allocated per deal. This suggests investors are concentrating their capital on companies with the strongest potential. Katie Stanton of Moxxie Ventures emphasized the importance of defensibility, noting that while starting a company has become easier, building a truly defensible business is now a significant challenge.

GV, according to Sangeen Zeb, employs a specific formula to assess startups, prioritizing product-market fit. A key indicator is consistent quarterly growth in demand, demonstrating a repeatable and scalable sales process. Stanton echoed this sentiment, stressing the need for companies to prove their ability to repeatedly sell and grow within a substantial market.

The current environment necessitates a critical evaluation of whether venture-scale growth is the right path for every company. Green cautioned against pursuing venture capital if the potential for significant business expansion is not present. This suggests a shift towards prioritizing sustainable and scalable business models over rapid, unsustainable growth.

Looking ahead, startups seeking Series A funding will need to demonstrate not only a compelling product or service but also a clear path to defensibility, consistent growth, and a viable strategy for achieving significant market impact. The focus is shifting towards proven performance and sustainable business models, signaling a more discerning approach from investors in the coming year.