Once more, the atmosphere in Silicon Valley has shifted. The clipped confidence of founders practicing their pitches in conference rooms with glass walls and the coffee lines on Sand Hill Road are both examples of it. “Conviction” is being used in place of the word “discipline.” And 2021 is reverberating somewhere in the distance.
The figure landed like a flare in the night sky when Sequoia Capital reportedly led a $1 billion seed investment into an AI business dubbed Ineffable Intelligence with a $4 billion value – pre-product, pre-revenue. One billion dollars. at the seed. This type of figure used to characterize late-stage unicorn rounds.
| Category | Details |
|---|---|
| Firm | Sequoia Capital |
| Notable Investment | $1B seed round in Ineffable Intelligence |
| Reported Valuation | $4B (pre-product, pre-revenue) |
| Sector Focus | Artificial Intelligence |
| Market Trend | 65%+ of U.S. venture deal value flowing into AI (2025) |
| Reference | https://www.sequoiacap.com |
Perhaps this is more about positioning than it is about excitement. It appears that investors perceive artificial intelligence as a revolution in technology rather than merely another trend. If that’s the case, it makes sense to go in early, aggressively early. However, rationality is not always constrained.
The atmosphere in a Menlo Park venture office feels charged once more. Neural network diagrams are displayed on whiteboards. Late into the night, partners are updating deal memoranda. Some believe that it would be worse to miss out on the next generation of AI platforms than to overspend on them.
According to reports, AI will account for over 65% of all venture transaction value in the US in 2025. The sector is not receiving any inflow of capital. It’s being overloaded. Additionally, almost 40% of seeds and series There have been financing rounds worth more than $100 million. Silently, the meaning of “seed” is evolving.
In the past, seed meant tenacious experimentation with a prototype, a tiny check, and a few engineers in a small office. These days, it might mean having a sizable war chest that allows you to recruit top researchers, acquire computer infrastructure, and control talent markets before rivals even raise their Series A funding.
David Silver, a former Google DeepMind scientist, is at the heart of Sequoia’s Ineffable Intelligence purchase. Just that pedigree is significant. Reputation is cash in this business. Elite AI-trained founders are commanding valuations that don’t seem to be based on conventional parameters.
The market has become so divided that it is difficult to ignore it. Megarounds are being raised by AI startups. Startups without AI are having trouble closing small checks. Seldom has the gap between the “haves” and the “have-nots” felt more pronounced.
There is a useful justification. It takes a lot of processing power to train frontier AI models. It costs money to have access to data centers, GPUs, and research personnel. Because they believe that scale is more important than diversification, venture firms are putting their money into fewer, bigger wagers.
However, a psychological undercurrent is also present. It’s still hard to forget 2022 and 2023, when Sequoia itself suffered losses from the FTX crash, venture investment froze, and values shrank. The company reorganized its foreign operations. It adjusted itself. It now seems to be tilting back toward danger.
Sequoia introduced two new early-stage funds in late 2025: a $750 million venture fund and a $200 million dedicated seed fund. Long-term conviction was highlighted in the messaging. In this case, however, conviction entails signing extremely big checks very early.
One gets the impression from seeing founders move about between pitch sessions that investors are once more more interested in narrative than traction. AI labs are making enormous sums of money without any goods or income. The wager is on potential, on the likelihood that the pre-product startup of today will develop into the infrastructure layer of tomorrow.
Whether these valuations can be justified without equally large departures is still up for debate. The admission price is exorbitant at $4 billion. The pressure to establish a demonstrable advantage, acquire corporate contracts, and scale rapidly all increase.
However, the rivalry between elite venture capital firms fuels the fire. Nobody wants to be the next Anthropic or OpenAI fund to fail. That haste is fueled by that dread of omission.
Exuberance and caution have always been in balance in Silicon Valley. Money moved freely in 2021. It suddenly constricted in 2022. The pendulum seems to be swinging once more in 2026, at least in the field of artificial intelligence.
Perhaps this time will be different. The technological advances of AI are observable. There are several uses in various industries. The magnitude and pace of capital concentration, however, seem familiar.
Engineers are being handed signing bonuses that mirror athlete contracts inside startup offices. Recruiters are swarming about. A few high-conviction wagers are also causing investors to rebalance their holdings.
