In early October, DualEntry, an artificial intelligence enterprise resource planning (ERP) startup, announced a $90 million Series A round led by Lightspeed and Khosla Ventures, valuing the one-year-old business at $415 million.
The company is looking to replace legacy software like Oracle NetSuite with its offering that can automate day-to-day tasks and provide predictive insights. The massive round of funding from top VC firms signaled that the startup is likely to experience phenomenal revenue growth.
However, one VC who declined to invest told TechCrunch that DualEntry’s annual recurring revenue (ARR) was only about $400,000 when it reviewed the deal in August. DualEntry co-founder Santiago Nestares denies that number. When asked about the revenue when the deal closed, Nestares said it was “significantly higher than that.”
Even so, an extremely handsome valuation relative to revenue is becoming an increasingly common investment strategy among top VC firms. The tactic is known as “kingmaking”.
This approach involves raising crowdfunding to a startup in a competitive category with the goal of crushing rivals by giving the chosen company a bank account advantage so significant that it creates the appearance of market dominance.
Kingmaking isn’t new, but its timing has changed dramatically.
“Venture capitalists have always evaluated a set of competitors and then placed a bet on who they think will be the winner in a category. What’s different is that it happens much earlier,” said Jeremy Kaufmann, a partner at Scale Venture Partners.
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This early offensive the funding contrasts with the last investment cycle.
“The 2010 version was just called ‘capital as a weapon,'” said David Peterson, partner at Angular Ventures. He pointed out that crowdfunding in Uber and Lyft was a classic example of this, but the capital arming for ride-sharing companies didn’t start until they reached Series C or D rounds.
As with Uber vs. Lyft, investors in DualEntry rivals Rillet and Campfire are apparently just as eager to see their bets succeed with the help of substantial capital. In early August, Rillet raised one $70 million Series B led by a16z and Iconiq, just two months after the company closed a $25 million Series A led by Sequoia.
Similarly, Campfire AI has had two back-to-back funding rounds. In October, grab one $65 million Series Bjust two months after announcing a $35 million Series A round led by Accel.
AI ERP is just one of many AI application categories where startups are rapidly raising funding. “There is no new data between rounds. Series Bs happen 27-60 days after the series as regularly,” Jaya Gupta, partner at Foundation Capital, posted on X last month. In addition to AI ERP, he wrote that he sees this pattern in categories such as IT service management and SOC compliance.
While some startups, like Cursor or Lovable, have reportedly grown at breakneck speeds between consecutive rounds, several VCs told TechCrunch that’s not the case for everyone. ERP AI and several other categories of startups that raised multiple rounds in 2025 still have ARRs in the single-digit millions, these investors said.
While not all VCs agree that kingmaking is a sound investment strategy, there are reasons why offering large amounts of capital could be beneficial even when the startup maintains a moderate burn rate. For example, well-funded startups are seen as more likely to survive than large enterprise buyers, making them the preferred supplier for major software purchases. That’s a strategy that has helped legal AI startup Harvey land big law firm clients, investors say.
However, history shows that crowdfunding offers no guarantee of success, with notable failures including logistics company Convoy and the insolvency of scooter company Bird.
But these precedents don’t bother big VC firms. They prefer to bet on a category that looks like a good case for AI, and they prefer to invest early because, as Peterson put it: “Everyone has fully internalized the lesson of the law of power. In the 2010s, companies could grow faster and get bigger than almost anyone realized. You couldn’t have overpaid if you were an early investor in Uber.”
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