AI Software Funding Stages
February 2026
Deepthi Madhava
Pre-Seed, Seed, and Series A: What Actually Changes as a Startup Grows - and What’s Different with AI Companies
AI is now a core part of the modern data stack. As a result, what were once traditional software companies are increasingly AI application companies, first through generative AI (chatbot like interfaces), and increasingly through agentic AI systems that can take action and execute workflows end-to-end. That shift naturally raises an important question: how should investors evaluate AI application companies at different funding stages – and is it fundamentally different from how we evaluated software companies in the past?
The short answer: the core framework is the same. What has changed is the bar.
In an AI-first world, investor expectations around speed of execution, technical depth, and demonstrated traction have risen meaningfully. Product cycles are faster, distribution channels are more powerful, and early signals arrive sooner. The fundamentals still matter but the evidence required to believe them has increased.
With that in mind, we revisited our internal framework for evaluating early-stage companies at Oregon Venture Fund. Startup stages are often defined by round labels and valuations. A more useful lens is what a company is proving at each stage — across product, traction, team, and scale.
Below is the simple framework we use to directionally anchor investment stage readiness for AI applications.
What’s Different in AI World?
Pace and reliability matter more than ever. Just as important are solutions that are difficult to replicate, grounded in deep expertise and technical complexity.
Fast traction is often the outcome of three things coming together:
A product that is intuitive, reliable, secure and quick to show value
Deep insight into the user’s workflow and pain points
Access to rapidly scaling distribution channels
When those align, signal appears earlier. But that does not reduce risk - it simply shifts where risk lives. We still underwrite the same core questions. We just expect clearer evidence, sooner.
This framework is not about round labels. It’s about risk being retired. At each stage, we are underwriting a different question:
Pre-Seed
Is this a real problem that is valuable to solve, with an exceptional team building something differentiated?
Seed
Does this product truly solve the problem – and can the team repeat selling it?
Series A
Can this become a large, scalable business with institutional outcomes?
At the end of the day, our goal is simple - we are looking to partner with insanely great teams, targeting large opportunities with “must have” differentiated solutions that make the world a better place.
If you’re a founder – or a team with at least one C-suite leader based in Oregon or Southern Washington – we’d love to hear from you. Reach out at Deepthi@oregonventurefund.com
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