[Spark VC Weekly Insight] AI Startups Face Investor Discipline Amid Hype

While AI continues to dominate headlines and pitch decks, venture capitalists are beginning to tighten their criteria for new investments. The frenzy of "AI for everything" is giving way to a more calculated approach: startups must now show not only promising technology but also clear go-to-market strategies and revenue pipelines.

Investors are particularly cautious about inflated user metrics and look instead for sustainable engagement and cost of acquisition. The spotlight is shifting from large language models (LLMs) alone to domain-specific applications where AI solves high-friction problems.

AI in radiology diagnostics, compliance automation, and fashion design tools are some of the sectors gaining momentum. Founders are also adjusting their internal strategy: hiring fewer but more specialized engineers, building lighter MVPs, and experimenting with early monetization.

Fundraising decks now feature path-to-profitability slides and proof of early enterprise traction.