Published on: September 25, 2025 at 3:11 pm
By Nick Keppler
In 2024, venture-capital funds invested $100 billion in AI startups, an 80% increase from 2023, according to Crunchbase, a provider of information about private companies.
This is an early part of a familiar cycle, said Academy of Management Scholar Marc Gruber of the École Polytechnique Fédérale de Lausanne.
“I’ve been in academia long enough to see the internet bubble of the 1990s burst,” Gruber said. “We see this in in all the different eras.
“There was a period when there were a lot of blockchain-based startups,” he said. “That was a trend a few years ago.”
For a few years, a concept—such as ecommerce or social media—will become trendy among startups. Founders will incorporate it into their business model (or at least their marketing communications). Eventually, most of these businesses will fail, and it will seem obvious in retrospect that the buzzword was shoehorned in to try to benefit from the fad.
“We have this AI funding boom,” said Gruber. “People will eventually realize if you have AI on your company website and logo or whatever, you need to ultimately deliver value.”
Although there are always investors itching to get in on (or near) the ground floor of the next big thing, over the last 30 years, the boom-bust cycle has soured some people’s perception of startups, once seen as an edgy vehicle for innovation and business genius that a stodgy established company would not understand or could not replicate.
“Many startups fail,” said Gruber. “They just don’t find something that customers want or want long enough to warrant that there’s a long-term business.
“That’s where I think the negative perception comes in,” he said. “These startups have clients, suppliers, and employees, and if they fail, none of them are extremely happy, and there are disappointed funders as well.”
