I couldn’t agree more with the very first insight in this article. It’s the basis of a new fund I’m raising called Castle Fund. Part of the thesis is that VCs don’t understand the new S-curves —- even hypergrowth seed stage companies can be disrupted severely before they even make it to Series B — the top of technology S-curves is lower than it has ever been.
The whole valuation framework in the article is built around the “D factor,” which itself relies on the assumption that open-source AI is catching up. But that assumption is flawed. What’s being called “open source” today isn’t truly open—it’s not like Linux or Python, born from communities of users. These models come from well-funded companies trying to disrupt bigger players and take their spot. It’s not a grassroots movement—it’s a power play between giants with deep pockets. So the foundation of the article’s logic is already shaky.
On top of that, it completely misses the geopolitical reality. AI companies aren’t regular startups—they are future infrastructure. Look at Mistral. It’s not just a $6B startup—it’s Europe’s only real shot at AI sovereignty. If needed, the EU will pour billions into it, not based on market logic but national survival. This isn’t just about tech or business—it’s about who controls the future cognitive layer of the world. We’re not watching a normal market evolve—we’re witnessing a new global power struggle unfold.
1. on venture investing - what investors are betting on is not today's value, but that IF it works out, what could the FUTURE value be. If oai can be a trillion dollar company, $100bn vs. $200bn is a moot discussion - other than pretty and prettier IRRs
2. your valuation framework bounding oai btw $140-200bn as the WORST and BEST case is quite a narrow band - a mere a 30% top to bottom variance, I'd expect a higher range between BASE and WORST case, let alone BEST and WORST - this alone indicates potential and significant flaws in your model framework.
And personally, I think oai is worth far less than your numbers for reasons you have not addressed.
Re 1: This is exactly why VCs don't care about valuations! They overestimate the likelihood that a company will become a $1T company. But they should absolutely care about entry valuation because IT WILL affect their returns.
Re 2: We were actually debating whether we should have a wider or narrower range for the worst and best cases. In the end, we chose to go for a narrower range because that makes the prediction more meaningful; a super wide range loses practical utility because it can be anything. Plug in a higher D factor and get a lower estimate! :D
Superb insights. Thank you for framing this so well🙏 . Can’t wait for part 2
substack turning into academia lol
I couldn’t agree more with the very first insight in this article. It’s the basis of a new fund I’m raising called Castle Fund. Part of the thesis is that VCs don’t understand the new S-curves —- even hypergrowth seed stage companies can be disrupted severely before they even make it to Series B — the top of technology S-curves is lower than it has ever been.
The whole valuation framework in the article is built around the “D factor,” which itself relies on the assumption that open-source AI is catching up. But that assumption is flawed. What’s being called “open source” today isn’t truly open—it’s not like Linux or Python, born from communities of users. These models come from well-funded companies trying to disrupt bigger players and take their spot. It’s not a grassroots movement—it’s a power play between giants with deep pockets. So the foundation of the article’s logic is already shaky.
On top of that, it completely misses the geopolitical reality. AI companies aren’t regular startups—they are future infrastructure. Look at Mistral. It’s not just a $6B startup—it’s Europe’s only real shot at AI sovereignty. If needed, the EU will pour billions into it, not based on market logic but national survival. This isn’t just about tech or business—it’s about who controls the future cognitive layer of the world. We’re not watching a normal market evolve—we’re witnessing a new global power struggle unfold.
Hello Jenny,
I hope this communique finds you in a moment of stillness.
Have huge respect for your work and reflective pieces.
We’ve just opened the first door of something we’ve been quietly crafting for years—
A work not meant for markets, but for reflection and memory.
Not designed to perform, but to endure.
It’s called The Silent Treasury.
A place where judgment is kept like firewood: dry, sacred, and meant for long winters.
Where trust, vision, resilience, patience, and self-stewardship are treated as capital—more rare, perhaps, than liquidity itself.
This first piece speaks to a quiet truth we’ve long sat with:
Why many modern PE, VC, Hedge, Alt funds, SPAC, and rollups fracture before they truly root.
And what it means to build something meant to be left, not merely exited.
It’s not short. Or viral.
But it’s built to last.
And if it speaks to something you’ve always known but rarely seen expressed,
then perhaps this work belongs in your world.
The publication link is enclosed, should you wish to experience it.
https://helloin.substack.com/p/built-to-be-left?r=5i8pez
Warmly,
The Silent Treasury
A vault where wisdom echoes in stillness, and eternity breathes.
Good one but kind of misses the point on 2 front:
1. on venture investing - what investors are betting on is not today's value, but that IF it works out, what could the FUTURE value be. If oai can be a trillion dollar company, $100bn vs. $200bn is a moot discussion - other than pretty and prettier IRRs
2. your valuation framework bounding oai btw $140-200bn as the WORST and BEST case is quite a narrow band - a mere a 30% top to bottom variance, I'd expect a higher range between BASE and WORST case, let alone BEST and WORST - this alone indicates potential and significant flaws in your model framework.
And personally, I think oai is worth far less than your numbers for reasons you have not addressed.
Re 1: This is exactly why VCs don't care about valuations! They overestimate the likelihood that a company will become a $1T company. But they should absolutely care about entry valuation because IT WILL affect their returns.
Re 2: We were actually debating whether we should have a wider or narrower range for the worst and best cases. In the end, we chose to go for a narrower range because that makes the prediction more meaningful; a super wide range loses practical utility because it can be anything. Plug in a higher D factor and get a lower estimate! :D