Tag: venture

Investors spill what they aren’t looking for anymore in AI SaaS companies

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Investors have been pouring billions into AI companies over the past few years, as the technology continues to hold sway in the Valley and thus the world. But not all AI companies are grabbing investor attention.

Indeed, even as it seems every company these days is rebranding to include “AI” in its name, some startup ideas are just no longer in favor with investors. TechCrunch spoke with VCs to learn what investors aren’t looking for in AI software-as-a-service startups anymore.

Popular SaaS categories for investors now include startups building AI-native infrastructure, vertical SaaS with proprietary data, systems of action (those helping users complete tasks), and platforms deeply embedded in mission-critical workflows, according to Aaron Holiday, a managing partner at 645 Ventures. 

But he also gave a list of companies that are considered quite boring to investors these days: Startups building thin workflow layers, generic horizontal tools, light product management, and surface-level analytics — basically, anything an AI agent can now do. 

Abdul Abdirahman, an investor at the firm F Prime, added that generic vertical software “without proprietary data moats” is no longer popular, and Igor Ryabenky, a founder and managing partner at AltaIR Capital, went deeper on that point. He said investors aren’t interested in anything, really, that doesn’t have much product depth. 

“If your differentiation lives mostly in UI [user interface] and automation, that’s no longer enough,” he said. “The barrier to entry has dropped, which makes building a real moat much harder.” 

New companies entering the market now need to build around “real workflow ownership and a clear understanding of the problem from day one,” he said.  “Massive codebases are no longer an advantage. What matters more is speed, focus, and the ability to adapt quickly. Pricing also needs to be flexible: rigid per-seat models will be harder to defend, while consumption-based models make more sense in this environment.” 

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Jake Saper, a general partner at Emergence Capital, also had thoughts on ownership. To him, the differences between Cursor and Claude Code are the “canary in the coal mine.” 

“One owns the developer’s workflow, the other just executes the task,” Saper continued. “Developers are increasingly choosing the execution over process.” 

He said any product dealing with “workflow stickiness” — meaning trying to attract as many human customers as possible to continuously use the product — might find themselves in an uphill battle as agents takeover the workflow.

“Pre-Claude, getting humans to do their jobs inside your software was a powerful moat, but if agents are doing the work, who cares about human workflow?” he told TechCrunch.

He also thinks integrations are becoming less popular, especially as Anthropic’s model context protocol (MCP) makes it easier than ever to connect AI models to external data and systems. This means someone doesn’t need to download multiple integrations or build their own customer integrations; they can just use the MCP. 

“Being the connector used to be a moat,” Saper said. “Soon, it’ll be a utility.”

Also, no longer en vogue include the “workflow automation and task management tools that enable the coordination of human work become less necessary if, over time, agents just execute the tasks,” Abdirahman said, citing examples, mainly public SaaS companies whose stocks are down as new AI-native startups arise with better, more efficient technology. 

Ryabenky said the SaaS companies struggling to raise right now are the ones that can easily be replicated, he said.

“Generic productivity tools, project management software, basic CRM clones, and thin AI wrappers built on top of existing APIs fall into this category,” he said. “If the product is mostly an interface layer without deep integration, proprietary data, or embedded process knowledge, strong AI-native teams can rebuild it quickly. That is what makes investors cautious.”

Overa, what remains attractive about SaaS is depth and expertise, with tools embedded in critical workflows. He said companies should right now look into integrating AI deeply into their products and update their marketing to reflect that, Ryabenky continued.

“Investors are reallocating capital toward businesses that own workflows, data, and domain expertise,”  Ryabenky said. “And away from products that can be copied without much effort.” 

Insight Partners sued by former vice president Kate Lowry

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Kate Lowry, a former vice president at Insight Partners, is suing the firm, alleging disability discrimination, gender discrimination, and wrongful termination, according to a suit filed on December 30 in San Mateo County, California, and seen by TechCrunch.  
 
Insight Partners did not immediately respond to TechCrunch’s request for comment. 

Lowry told TechCrunch she filed the suit because she believes “too many powerful, wealthy people in venture act like it’s OK to break the law and systemically underpay and abuse their employees.”

“It’s an oppressive system that reflect[s] broader trends in society that use fear, intimidation, and power to silence and isolate truth. I’m trying to change that.”

Lowry began working at Insight Partners in 2022, after previously working for Meta, McKinsey & Company, and an early-stage startup. The suit alleges that, upon being hired, she was assigned to a different supervisor than the person mentioned during her interview.  

She alleges in the suit that she was told by her new supervisor, who was a woman, to be “online all the time, including PTO, holidays, and weekends,” and to respond between “6 a.m. and 11 p.m. daily.”  

Lowry says in the suit that this first supervisor “berated, hazed, and antagonized” her, spoke openly about a hazing that would be “longer and more intense” than what she put other male reports through.  

Some comments the supervisor allegedly made, according to the suit, include “you are incompetent, shut up and take notes” and “you need to obey me like a dog; do whatever I say whenever I say it, without speaking.”  Lowry also alleges that her supervisor assigned her “redundant tasks” and restricted her ability to participate in calls, while allowing less experienced male colleagues to do so. Lowry, instead, she alleges, was relegated to “administrative tasks such as note-taking and cataloging.”  

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Lowry said she became “increasingly ill” because of the work environment and that her physician advised a medical leave of absence, which she was granted and took from February to July 2023.  

When she returned to work, she was placed on a new team and, the suit alleges, was told by the head of human resources that “if the new team did not like her, she would be fired.”  

In September 2023, Lowry said she got a concussion and took another medical leave and returned to work near the end of 2024. Due to some departures, she was placed under the supervision of a new person, where Lowry said her poor treatment continued. She also alleges that in 2024, her compensation was about 30% below the market. 

By April 2025, she alleges she was told her compensation would be cut. In May of 2025, through her attorneys, Lowry sent a letter to Insight regarding her alleged treatment by the company. A week later, the firm terminated her employment, the suit states.  

The lawsuit is reminiscent of Ellen Pao’s suit against Kleiner Perkins back in 2012, in which she alleged discrimination and retaliation. That suit offered what was, at the time, a rare glimpse into how women partners felt they were treated in venture capital. Though Pao lost that suit, it sent waves through the industry, and other women went on to sue major tech companies.  

Emm raises $9M seed to create one of the world’s first ‘smart’ menstrual cups

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Jenny Button first thought of Emm during the COVID lockdown. She was using an Oura ring and the Whoop monitoring band and getting insights about her body, but there wasn’t a device that could provide data about one of the most important aspects — reproductive and menstrual health.  

“It seemed crazy to me, because these are things that every woman wants to be able to track and better understand,” she told TechCrunch. She thought to herself: Why not make a wearable device that can tell someone more about their reproductive health? She penned a letter to one of the engineers at Dyson, made a connection, and started testing the idea.  

“Five years later, following thousands of designs and iterations and extended user testing, we’ve revealed the world’s first smart menstrual cup,” said Button.  

The UK-based company has also raised a $9 million (£6.8 million)  seed round, one led by Lunar Ventures as it prepares to officially launch its product next year.  

The product functions like a regular menstrual cup — designed to store period blood rather than absorb it. But Emm’s medical-grade silicone is “fitted with ultra-thin, advanced sensor technology.” This sensor gathers data that will help users understand patterns about their cycles. Button hopes that it could “transform the research, diagnosis and treatment of menstrual and reproductive health conditions.”  

She isn’t the only one who thinks this way. Other femtech founders told The Guardian a few months ago that menstrual blood was an “overlooked opportunity in women’s health” that could offer insights not available from health tests based on circulatory blood. 

It could, for instance, help diagnose painful and often misdiagnosed medical conditions like endometriosis.  

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“One in ten women today suffer from endometriosis,” Button said. “A condition that, like many others in reproductive health, takes an average of seven to ten years to diagnose.” 

That delay “is largely due to the lack of meaningful data and poor characterization of menstrual health in clinical settings,” Button believes. “There have been no reliable tools to accurately and objectively track that aspect of health until now.” 

Beyond endometriosis, she added that one in three women experiences “severe reproductive health issues” throughout their lives.  

Data gathered from the Emm app is encrypted and stored securely, with two-factor authentication. “It’s also always anonymized or pseudonymized,” meaning personal identifiers are removed or replaced with codes, “and will only be accessed by the people at Emm who genuinely need it,” she said. 

Button used the word “strategic” to describe her funding round and said she connected with her lead investor through her network. Others in the round include Alumni Ventures (who backed Oura), The Labcorp Venture Fund and BlueLion Global. Money will be used to launch the product into the UK market next year, she said, adding that the waitlist has already topped 30,000 pre-orders to go live soon.  

Capital will also be used for research and development. Button hopes to enter the U.S. market in early 2027.  

“Menstrual health is only the jumping off point for Emm,” said Button. “Ultimately, I believe we will have a profound impact on women’s health more broadly,” she continued, adding she hopes to expand the product one day, perhaps into diagnosis, other digital care tools, and even therapeutics.  

“Our mission is to accelerate diagnosis, equip people with the data to advocate for themselves, and ultimately help them take control of their own bodies and health journeys,” she said. 

Valla raises $2.7M to make legal recourse more accessible to employees

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After a while, Danae Shell got tired of hearing the same story over and over again. 

“Something bad would happen to someone at work, and the story always ended the same way,” she told TechCrunch. “They just left, because doing anything else was incredibly complex and expensive.” 

One doesn’t need to look far to notice that for many people, seeking legal recourse feels so daunting and complex that many just don’t try. Even for someone with a cushy tech job, the prospect of going against their company is daunting.

That bothered Shell so much that in 2022, she launched Valla, which seeks to make legal support more accessible to workers. 

The company focuses on employment law, and since its launch, it says, more than 12,000 workers have successfully brought complaints against employers and negotiated settlements.

“The basic thesis of Valla was, ‘If we can build tools that let someone file their tax return from their mobile phone, surely we can build something that can help them manage their own legal issue,’” Shell said.

Valla platform enables users to collect their own evidence, generate documents, and then talk to legal experts who “coach” them through what the legal process would be for each stage of their case. For example, Shell said, a user can keep track of an ongoing issue at work, draft a Tribunal claim, and then purchase a coaching package to prepare for the preliminary hearing.

Like nearly every other startup these days, Valla uses AI to streamline knowledge transfer. “The GenAI engine in our platform acts as a legal secretary in the background,” Shell said. “It does everything from briefing the coach on the case, taking notes and actions during any calls, and picking up all the admin and reminders as the case progresses.” 

Investors seem to like what they see at Valla: Today, the company said it had raised a £2 million (about $2.7 million) seed round led by Ada Ventures. Active Partners and Portfolio Ventures, as well as returning investors Techstart and Resolution Foundation, also invested. 

Shell said Valla started using generative AI in early 2023 and paired with the early traction her product received, that helped investors see the potential of her product. 

The company will use the fresh capital to boost marketing, build relationships with worker unions and insurers, and build more AI features within the platform. After employment law, Shell said the company hopes to expand into small claims and tenancy. 

“Then we will broaden out to other geographies,” she said. “We’re already looking at opportunities in the U.S. and Europe.” 

DEI backlash: Stay up-to-date on the latest legal and corporate challenges

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The Great Rollback is here. The phrase refers to Big Tech starting to slash some of the diversity, equity and inclusion (DEI) programs that were implemented shortly after the murder of George Floyd. Most recently, Zoom announced that it laid off its DEI team. Google and Meta have started to defund their DEI programs, and funding to Black founders continues to dip. Lawsuits have been filed targeting DEI programs, forcing companies to now hide their inclusion efforts while billionaires are arguing on X about whether DEI initiatives are discriminatory or not.

It’s clear that this year will be a turning point for DEI, especially as states continue to ban affirmative action measures and with a presidential election just around the corner. Here are all the stories you need to read to stay updated on the developments regarding tech’s ongoing DEI backlash.

This list will be updated, so keep checking back.

Read about the AAER vs. Fearless Fund lawsuit

In August 2023, the American Alliance for Equal Rights (AAER), founded by Edward Blum, the man who helped overturn affirmative action in education, filed a lawsuit against the venture fund Fearless Fund for offering business grants to Black women. The AAER alleged that the grant discriminates against white and Asian American founders. The Fund and AAER are battling the case in court, and currently, Fearless Fund is barred from awarding grants to any more Black women.

On Instagram, Arian Simone, the CEO of the Fund, said that the lawsuit has financially hurt the fund, as it lost millions in potential commitments and faced staff cuts, low cash run, expensive legal bills and threatening letters. The impact of the lawsuit, however, could go much deeper than just affecting one fund and could have ripple effects throughout the ecosystem.

But Fearless Fund isn’t the only one being sued. The Small Business Administration, Minority Business Development Agency and even smaller companies like Hello Alice are being targeted and sued for trying to implement diverse grant schemes.

Read what critics are saying about DEI

Anti-DEI rhetoric has dramatically increased. A lot of big names in venture, like Elon Musk, Peter Thiel and Y Combinator founder Paul Graham, have shared sentiments against DEI, while only a few, like Mark Cuban, have expressed support for it. This division is bound to last and only get deeper as billionaires continue wielding their power — and influence — to make their opinions heard.

At the same time, there are many who are indeed trying to change and become more inclusive. Change takes time, though, and some of the promises made haven’t been fulfilled.

Read how governments are handling DEI

California passed a bill last year that will soon require venture capital firms in the state to reveal the diversity breakdown of the founders they back. Some herald the bill as progress in a notoriously opaque industry.

However, California is not the only state looking to address diversity. Massachusetts is looking to pass a bill that would extend workplace laws to the venture industry; New York City venture firms informally got together to create an alliance to back more diversity. There is excitement surrounding these initiatives, but also some hesitation.

Rep. Emanuel Cleaver, who is co-chair of the Congressional Black Caucus, has been trying to pass a bill in Congress that would make endowment investing more transparent. He’s hit a snag and said that a few educational institutions in the nation have been outright “nasty” toward him and his efforts.

DEI has become a hotbed issue in red states, as many have taken to banning affirmative action measures. Many tech hubs are actually just blue cities, meaning more liberal-leaning cities, within red, or more conservative-leaning, states. These include Tulsa, Atlanta, Miami and Austin, and all are at the forefront of helping to make tech more accessible to people outside of the Bay Area. But will their governing states put a dagger in all that progress?

Gov. Ron DeSantis, for example, is a leader in passing anti-DEI measures. From book banning to speech restrictions, he is also one of a few governors taking aim at ESG investing, proposing a move that could affect diverse fund managers in the state of Florida.

On a national level, the Congressional Black Caucus (CBC) has taken to finding out more about what is happening in tech. It recently wrote letters to OpenAI and the Department of Labor to see how the tech industry is looking to support Black talent during this time.

OpenAI actually did respond to the CBC, and we got the scoop on what happened next.

Read the latest DEI funding data

Funding to Black founders has continued to dip since 2020, and last year was no different.

Read the DEI view from abroad

Industries abroad look to the States, including when it comes to how marginalized founders are treated. Stay up-to-date on how global venture ecosystems are handling DEI and what it says about progress in the U.S.

France is a notoriously tricky ecosystem for Black Founders. Learn how the country is navigating one of the most opaque venture landscapes for people of color.

The U.K., meanwhile, has made a lot of progress regarding funding for Black founders.