From Founding to Flourishing: Banyan’s Path in AI Venture
When we launched Banyan in August 2023, we knew the AI startup landscape was primed for disruption. We didn’t have the typical Ivy League pedigrees or a deep legacy in venture capital, but we believed in the potential of AI—and our ability to spot and back the right founders. Despite a fair share of rejections and missed opportunities, each “no” only strengthened our commitment. Fast forward to today, and I’m grateful for how far we’ve come—surpassing even our own expectations in 2024.
2024 Results
Investments & Capital Deployed
Over the course of 2024, Banyan completed 9 investments, deploying $8.7M (approx.) to bolster next-generation AI companies. These startups collectively generated $124M in revenue (approx.), translating to an average revenue of $13.7M per investment.
Investments by Stage
The numbers speak for themselves: AI funding—when channeled into strong teams and compelling products—can create explosive growth and generate tangible results.
What’s on the Horizon for 2025
- Graduation Rates & the “AI Bubble”
We’ll likely see lower graduation rates from Pre-Seed to Seed to Series A among AI startups. So much capital is being poured into AI right now that weak fundamentals often slip through, only to stumble when it’s time for follow-on funding. While some may call it an “AI bubble,” I predict that overall funding in AI will keep growing, albeit with more scrutiny and discipline.
- Intensifying AI Chip War
As more AI workloads move from training to real-world inference, the market will demand faster, more affordable chips. Companies won’t want to rely solely on NVIDIA, paving the way for alternatives like Recogni, Akash Systems, and other emerging hardware players in the Banyan portfolio. This is where we’ll see serious innovation—and competition.
- Consolidation in Emerging AI-Native Categories
Many newer AI-native categories are ripe for consolidation. One or two leaders will emerge and continue to scale, while third-, fourth-, or fifth-place contenders either get acquired or fade away. In large markets like LLMs, GPUs, and storage, multiple players can succeed. But in smaller niches, only a handful will survive.
- The Power of Verticalization at Scale
Highly specialized, verticalized application startups are hitting staggering revenue figures with remarkably lean teams. Over the next year, we’ll see more of these hyper-focused businesses reach revenues typically associated with large public companies.
Looking Ahead
The journey so far has been nothing short of stellar, and it’s all thanks to the visionary founders and supportive limited partners who believe in Banyan’s mission. Together, we’ll continue to break new ground in AI investing. This is just the beginning—stay tuned for what’s next!
