Venture capitalists at TechCrunch Disrupt delivered a sobering message to startups seeking Series A funding: the bar has been raised. Investors are exercising greater selectivity amidst the transformative influence of artificial intelligence on the tech landscape.

Thomas Green of Insight Partners highlighted a key trend: while the number of funded rounds is decreasing, the average deal size is increasing. This suggests a flight to quality, with investors concentrating capital in fewer, more promising ventures. Katie Stanton of Moxxie Ventures emphasized the heightened challenge of establishing a defensible business, despite the ease of initial company formation.

GV's Sangeen Zeb outlined the firm's evaluation framework, which centers on verifying product-market fit through consistent quarter-over-quarter performance improvements in demand. Stanton echoed this sentiment, stressing the importance of demonstrating repeatable sales and growth within a substantial and expanding market.

However, Green cautioned that venture-scale growth is not suitable for every company. He suggested that startups should only pursue Series A funding if they believe they have the potential to become a significantly large business. This implies a need for founders to carefully consider their long-term vision and whether it aligns with the expectations of venture capital investors.

The implications of this shift are significant. Startups will need to demonstrate stronger traction, more robust business models, and clearer paths to profitability to secure Series A funding. The focus on defensibility suggests that investors are prioritizing companies with unique technology, strong network effects, or other competitive advantages that can withstand the evolving market dynamics. As the AI boom continues to reshape the industry, the ability to adapt and innovate will be crucial for startups seeking to attract capital and achieve sustainable growth.