Are AI Features Increasing The Value Of Startups?

Startups that build in AI are really making more money, and often doing so faster than before. Last year, AI companies raised $26.9 billion across different funding stages, according to Carta. That made up a third of all venture capital tracked on their platform. From seed stage to Series E, startups working with AI are in the spotlight and in turn, being priced higher, too.

At seed level, startups using AI were valued at a median of $17.9 million. That’s 42% above their non-AI competitors. Series A companies using AI landed median valuations of $51.9 million, and at Series B, that went up to $143 million… Non-AI companies sat well below that.

AI founders are also generally raising more money. Series A rounds in AI were 20% bigger than other startups. At Series B, it got to 28%. Investors are quite evidently giving more to companies that build faster, automate more, or use machine learning to cut work.

 

What Does This Mean When Trying To Value A New Startup?

 

Figuring out how much a startup is worth takes a bit of calculation and a lot of instinct. Shopify has a guide on how startups are valued and it lays out different models. One of the more practical ones they mention is the Berkus method, which gives value to…

-a strong concept
-a working prototype
-a solid team
-useful partners
-early sales

Each can add up to $500,000 to a startup’s estimated value.

AI often makes this happen way sooner. Founders using AI tools can show working products quicker, without big teams or long delays. That helps them get further with less and prove what works sooner.

Another method looks at other startups in the same sector. If those companies raised money at 4 times their yearly sales, for example, then that figure becomes a base point. AI companies tend to raise at higher multiples because their tools often apply across more than one use case, and they scale quickly.

Even pre-revenue companies are takiing more… Carta says median valuations for AI startups went up 15% between 2022 and 2024. Non-AI startups went down 5% over that time. Investors seem more confident backing AI tools, even before those tools start making money.

 

 

What Makes Figma A Good Case Study?

 

Figma’s IPO is a recent example of how AI tools may actually be helping increase company value. Just days before its shares went public, Figma added AI-powered design features to its product. These tools let users auto-generate templates, write copy for interfaces, and get design suggestions…tasks that would normally take hours, now done in seconds.

The launch came at the perfect time, because Figma’s IPO was priced at $33 per share, but the stock rose 250% on day one, closing at just over $121 by Friday. That put its total value at nearly $60 billion. It became one of the highest profile tech IPOs in years.

Investors had been waiting for a tech company that could show both growth and product speed. Figma’s revenue grew 46% in the first quarter of 2024. Its net income tripled. Those gains matched well with its new AI tools, which showed how the company could build faster without hiring hundreds more staff.

It also really helped that Figma had a strong backing. Index Ventures turned a $100 million investment into $7.2 billion. Greylock Partners saw its $50 million stake grow to $6.75 billion. But the AI angle gave it a better opportunity that was missing when Adobe tried to buy it in 2022 for $20 billion. This was a deal that later stopped due to regulatory issues.

 

Are Investors Now Picking AI Over Everything Else?

 

AI is no longer boxed into only tech because it shows up in finance, healthcare, education, SaaS, and other spaces. That makes the label more common and makes startups more likely to pitch themselves through an AI lens…

CoreWeave is one of the recent IPOs where the AI angle was front and centre. The company builds infrastructure for AI workloads. Its public offering followed others like Circle and Chime, which also did well in 2024. Circle in particular saw a 440% increase in its stock price, helped along by a new US law backing stablecoins.