Business and history books alike look back on the dot-com boom with something between amusement and chagrin. In an age where everything was moving to the internet, it was a veritable gold rush without the guardrails to pause and consider that companies with names like “Diamond-studded Diapers for Dogs” didn’t need a .com domain (or a business loan). Yet a generation later, we find the same patterns with investors a few years ago salivating at any pitch with “AI-native” attached to it. That enthusiasm has cooled considerably after its initial heyday and now investors seem much more skeptical or even numb to the term. Founders who are still leaning on the “AI-native” narrative might inadvertently be triggering the opposite reaction they intended.

We love founders and encourage them to explore their ideas, so this is not meant to shame anyone. That being said, we’ve seen some admittedly wild ideas being pitched that would normally never have even made it to the conversation stage, only because they included the AI-native buzzwords that piqued investors’ interest. Now that’s just par for the course so the investors I work with are being inundated with these pitches that loudly signal they are AI-native startups but it’s just not the differentiator it once was.

Sure, it wasn’t so long ago that investors associated the term with technical sophistication. Ok, ok, some of these investors couldn’t tell an LLM from an MLM so they were pretty easily dazzled. However, even investors with engineering backgrounds were considering the term to be a signal of defensibility. These founders were now not only getting airtime with the investors but they were progressing to serious discussions. While some of them certainly merited this consideration, others were really overly relying on the idea of being AI-native to mask the fact they were just like those harebrained schemes from a generation ago.

Now, though, we’re seeing an overcorrection with some investors almost reflexively dismissing startups that lean a little too strongly on the AI-narrative. Whether salivating over it or dismissing it, the bottom line is that the term should not cloud our judgment in any way when it comes to evaluating the potential of a startup. We’ve talked about this before, but it really comes down to how AI actually changes the unit economics, defensibility or speed of the startup and its product(s). Taking the time to examine that more carefully will help ensure investors don’t miss out on genuinely good deals. No one wants to invest in a dud, but no one wants to miss out on a win because of hasty judgment calls either.

In other words, we’ll have to really dig into what AI means for the company, practically speaking. Has AI meaningfully moved the needle in terms of costs to serving customers? Or how about data and workflow in the product, has AI created an advantage that truly can’t be replicated by a competitor? (Remember, they have access to AI tools too!) Can it meaningfully reduce the sales cycle or expand the ICP to a broader market? If none of these are true the AI is probably just tacked on to generate buzz. If the answer to even one of these questions is yes though, the company definitely deserves a closer look regardless of what terms the founder uses.

A really easy test can be mentally removing all the buzzwords as you review a pitch. How much does the story still hold up? If the underlying business idea is defensible it won’t need the window dressing. The more that founders can demonstrate a keen understanding of the business without this overreliance, the more solid that startup might be.

We definitely don’t want to punish companies for using language that’s table stakes now. Scores of strong companies can genuinely wear the label “AI native” and we’re not arguing otherwise. It’s just a matter of separating those companies from others that are hiding behind it.

There are some questions you can ask yourself before passing on an investment or deciding to lean in. They are introspective, but worthwhile:

Are you reacting to the words and phrases, or the substance of the pitch? The gut response can be pretty strong be it excitement or fatigue, and that might cloud your judgment. Take a moment to allow the logic to kick in and not let the reflex override it.

Is the deal still interesting with the buzzwords removed? Can the pitch work without them? Most crucially, does the underlying business case still hold, independently of the terms used?

What is the true potential of the company and product? The fatigue of phrase overuse is understandable but can’t turn into saying “no” by default. What could you be missing out on with an automatic “no”?

AI-native might not be the signal it once was. Whether you’re a founder wanting to move past the cliché to craft a meaningful pitch or an investor trying to cut through the noise, let’s connect.