Four investors share how AI startups can cross the bridge to real enterprise contracts.
Three months ago, Leaders Fund co-founder Gideon Hayden conducted a small experiment.
He looked at the ages of the founders who founded ten AI startups after ChatGPT, such as Anysphere and ElevenLabs, and then looked at the ages of the founders of older giants like Stripe and SpaceX. The average age of founders has dropped from 31 to 25 years.
“Having the best product is probably 15 percent of the success.”
Gideon Hayden, Leaders Fund
In his thoughts shared on LinkedIn, Hayden said that either “some of these people are scammers” or “there is a new generation of AI startup founders who are starting successful companies much younger than we've seen in the past, and doing it with much less capital and fewer people.”
AI startups are scaling faster and younger than ever. But early speed is not the same as long-term survival. Capturing consumers' attention with a clever product demo is one thing, but persuading a regulated business to stake its reputation and data security on a team of ten people is another.
There are several well-known startups that are rumored or claimed to have reached $100 million in annual revenue very quickly and with relatively small teams, relying on product-driven growth rather than the standard corporate purchasing process.
But bridging the gap to true enterprise contracts can be a different challenge entirely. So BetaKit asked four investors what today's AI founders need to survive the hype, attract businesses, and build companies that last.
Plan without haste
Aspenwood Ventures managing director Lars Leckie regularly advises founding teams on selling to large organizations and describes today's procurement climate as the “Wild West.”
Many Fortune 500 companies are already testing AI tools, bypassing the usual barriers: security reviews, vendor assessments and compliance monitoring. According to a recent LayerX report, 91 percent AI tools inside enterprises operate without any control from IT.
Leckie says many AI companies are winning large contracts because businesses have relaxed procurement rules to benefit from AI.
“Friction has been eliminated from the cycle,” Leckie said.
But it won't last long. Leckie warned that businesses will eventually recalibrate and today's AI experiments will return to the standard procurement process.
Leckie said founders need to start “setting up the scaffolding to be ready for these changes” and be ready to do deals after the gold rush.
Prove that your company can survive
Paul McKinley, CIBC's chief operating officer and head of innovation banking, was the first to argue that businesses prefer to be fast followers rather than early adopters.
“Large enterprises cannot ignore AI,” McKinley said. “At the same time, they still have to carefully protect their data and customer information.”
This tension means startups are facing a tougher test than they might have expected. Buyers don't just evaluate a product; they evaluate whether the company itself can survive over time.
Elizabeth Weil, founding general partner at Scribble Ventures, said one of the strongest signals for businesses is founder-led sales.
“The way someone sells their vision to investors says a lot about their sales skills,” Weil said. “Founder-led selling is critical, and you can see a high degree of know-how in many factors such as speed, clarity of communication, conviction and networking. All of these translate well to sales in any industry.”
But communication alone does not guarantee sustainability. Businesses also want to be sure that the company will not fail if key people leave. Rapid growth and small teams can pose certain risks for corporate partners.
“If you have eight people and one or two key leaders leave, it becomes a bigger problem for the buyer,” McKinley added.
Add to this regulatory risk, compliance requirements and long implementation cycles, and the question becomes whether the startup has enough depth to survive.
“Having the best product is probably 15 percent of the success,” Hayden said. “It’s necessary, but not sufficient to get a deal done.”
Gain trust from sponsors
Corporate purchasing can last from weeks to months, and during this cycle buyers evaluate the suitability of the product as well as the degree of trust in the team to support them in the long term.
“What most startups lack in their early days is trust,” Hayden said. “They are young, they have not been tested yet. Nobody knows who they are.”
This is where the makeup of a startup's backers can tip the balance. When business buyers see reputable investors or financial institutions at the table, it signals that someone has already done their due diligence.
“When you have reliable, top-notch venture capitalists and a bank like us at the table, it means you already have some financial prudence,” McKinley added.
Patience is also a necessity. Leckie pointed to Calgary-based artificial intelligence startup Smart Access as one example of a team that scaled properly — gradually increasing contracts from $300,000 to $2 million — and then recently landed its first contract with an enterprise client.
According to Leckie, large enterprise wins come with large onboarding, compliance and support costs. Without the right investors and advisors, these costs can ruin a young team.
Even with strong support, founders can sabotage themselves by over-promising or under-delivering what is needed to serve enterprise clients. Investors and financial partners such as Hayden and Leaders Fund view how teams forecast resources as a key test of discipline.
“When I see companies that are doing very well, but they believe that they will never have to invest in things like account management, sales or customer support because they are an artificial intelligence company, that is a red flag to me,” Hayden said.
At the moment, small artificial intelligence teams are quickly implemented and identified with logos. But the real test will be whether they can move from shadow IT projects and pilot credit card systems to enterprise accounting systems.
“It’s easy to get excited about a really cool demo or what AI can do, but you have to be obsessed with the customers,” Hayden added. “I think that’s true both from a technology standpoint and in terms of how you can sell products to an enterprise.”
The purchasing hump is waiting. The startups that figure this out will be the ones that combine speed with resilience, reliability, and the unglamorous work of enterprise sales.
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Image provided Unsplash. Photo by Charles Deluvio.
