The Startup Boom That Isn't (Or Is It?)

LaurenOkay, so get this. My inbox this morning looked like a startup confetti cannon went off.

DerekMine too. Every headline's got the word boom in it.

LaurenBoom, surge, thriving, unicorn, pick a word.

DerekDude, it's like the whole internet decided startups are back all at once.

LaurenWhich I'm Lauren, this is Derek, and we're Tech Insider Weekly, so this is literally our job to notice.

DerekOur one job.

LaurenBut here's what's bugging me. Is this actually one big boom, or is it five totally different stories wearing the same T-shirt?

DerekOoh.

LaurenRight?

DerekBecause I saw a tiny economic authority press release. I saw a biotech incubator thing out of Cambridge. I saw some fintech fund announcement.

LaurenAnd a Microsoft Accelerator pick.

DerekWait, you saw that too?

LaurenEveryone saw that too, Derek. It was everywhere.

DerekFair.

LaurenHonestly, it felt less like reading the news and more like scrolling somebody's highlight reel.

DerekRight. Every story's the best version of itself. Nobody posts the boring Tuesday.

LaurenSo my brain's going, "Okay, is the whole ecosystem healthy, or are we just cherry-picking the good news?"

DerekThat's the question I actually want answered by the end of this.

LaurenSame. And wait till you hear where the money's actually going because it is not what the headlines are selling you.

DerekOoh, plot twist already?

LaurenBig one, but we're not there yet.

DerekTease. Absolute tease.

LaurenThat's the job.

DerekSo where do we even start unpacking all this? Five stories, one week?

LaurenStart small. Start hyperlocal. There was this one story in my reading pile that kicked the whole thing off for me.

DerekThe one that started your whole spiral this week?

LaurenThat one exactly.

DerekAll right, let's hear it.

LaurenOkay, so the East Grand Forks one actually stopped me mid-scroll. Since January, their economic development office has worked with 17 startups.

Derek17 in East Grand Forks?

LaurenRight. Tiny city, and their director, Maggie Brockling, said startups and prospects now make up about a quarter of the whole local economy.

DerekA quarter?

LaurenA quarter. That's not some incubator hype number. That's a small city economic development office looking at its own books.

DerekOkay, that's genuinely wild for a place that size.

LaurenLike, what does an economic development office even do with 17 startups? Office space? Introductions to funders?

DerekProbably both, and probably as much answering emails from people trying to figure out zoning for a small storefront lab.

LaurenRight?

DerekYeah. Meanwhile, Cambridge is doing this weird two-step. Biotech is actually shrinking there. Companies downsizing, layoffs, the whole thing.

LaurenWait, downsizing? I thought Kendall Square was the biotech capital of the universe.

DerekIt still kinda is. That's the twist. Kendall Square, the nonprofit incubator, just launched a whole new program to pull in international biotech startups, basically restocking the shelf while the old stock walks out the back door.

LaurenSo it's not growth, it's replacement.

DerekKinda, yeah. Same building, different tenants.

LaurenHuh.

DerekIt's the kinda churn that looks bad in a headline but might just be the market clearing out slower companies, made room for sharper ones.

LaurenOptimistic take. I like it.

DerekAnd then you've got Cascade AI, this platform for IT and HR shared services, getting picked from Microsoft's Pegasus Program for Startups.

LaurenFancy.

DerekThey took about 120 companies out of a pool of more than 10,000.

Lauren10,000 applying for 120 spots? That's basically a lottery with a business plan attached.

DerekYeah, pretty much.

LaurenBut it's real. Someone's building an actual product, and Microsoft's putting weight behind it.

DerekAnd that's the kind of validation that actually gets a startup in the door with enterprise IT buyers who otherwise never take the call.

LaurenRight, because Microsoft picked us out of 10,000 is a sentence you put directly on a sales deck.

DerekYeah, and then there's money moving in a totally different lane. Portage closed a $600 million fintech fund.

Lauren600 million?

DerekAnd they brought in Broadridge and Fifth Third as strategic limited partners, not just check writers, actual industry players with skin in the game.

LaurenWait, banks are now LPs in fintech funds that might eventually build tech that competes with banks?

DerekThe irony is not lost on me.

LaurenLove that for them.

DerekIt also tells you something about where fintech itself is headed. Banks want a seat at the table before the disruption hits them instead of after.

LaurenSmarter than getting blindsided, I'll give them that.

DerekSo you've got a city government, a biotech nonprofit, a software company, and an investment fund all putting out these genuinely good headlines in, like, the same week.

LaurenAnd every single one of them feels like proof that startups are everywhere and everything's fine.

DerekWhich honestly was my first reaction too. Feel-good headline, feel-good headline, feel-good headline.

LaurenBut you're doing that voice.

DerekWhat voice?

LaurenThe I already looked something up and I'm about to ruin this voice.

DerekOkay, Fair. It's just four nice stories doesn't tell you where the actual dollars are landing. It tells you where the press releases came from.

LaurenSure, but is that different? Money follows good ideas. Good ideas show up as press releases.

DerekDoes it, though? Because a city saying startups are a quarter of their economy and a Mega-Round closing at 600 million are not the same size of check.

LaurenOkay, that's Fair. Those are wildly different scales.

DerekRight. So I wanna stop treating headlines as data and just go look at data.

LaurenOoh, you pulled numbers.

DerekI pulled the Q1 numbers.

LaurenFor all of venture, not just like fintech or biotech?

DerekFor all of it, the whole scoreboard.

LaurenOkay, I'm sitting up now. Hit me.

DerekYou're gonna wanna be sitting down, actually.

LaurenOh, no.

DerekOh, yeah.

LaurenOkay, so I pulled up Crunchbase News, and the number on the screen made me put my coffee down. Don't tease. What's the number? Three hundred billion dollars global venture funding, first quarter of twenty twenty-six.

DerekWait, that's a quarter? Three months?

LaurenThree months across something like six thousand startups worldwide.

DerekOkay, but that's just like normal growth or-

LaurenUp more than one hundred and fifty percent from a year ago.

DerekA hundred and fifty percent? That's not growth. That's a rocket.

LaurenThat's what I thought too. Picture the entire venture market basically doubling and then adding half again on top.

DerekSo all those local stories we just went through, the incubator, the fund, all of it, that's the vibe. Everybody's swimming in the same rising tide.

LaurenThat's the headline, yeah. But then I kept reading.

DerekUh-oh, I know that voice.

LaurenCrunchbase News says about two hundred and forty-two billion of that three hundred billion went to AI.

DerekHold on, do that math for me. Two forty-two out of three hundred?

LaurenThat's roughly eighty percent of the entire quarter's global venture money.

DerekEighty percent going to one category.

LaurenOne category, and honestly, more like a handful of names inside that category: OpenAI, Anthropic, xAI, Waymo. Those four closed four of the five largest venture rounds ever recorded, ever in history.

DerekFour of the top five rounds of all time happened in the same three months?

LaurenSame three months. That's not four separate news cycles. That's basically one events calendar.

DerekFour calendar invites in the entire industry's attention span.

LaurenOkay, that changes the picture completely. It's not a rising tide. It's four boats with all the water in them.

DerekSure, if you wanna torture the metaphor.

LaurenI do. I'm going to.

DerekThere's actually an analysis from Qubit Capital that gets at why. They looked at where AI money is landing this year and found it's piling into two places: the mega rounds we just talked about and vertical AI apps built on top of them.

LaurenVertical meaning like AI for law firms, AI for radiology, that kind of thing.

DerekExactly that. And here's the part that stood out to me. Investors aren't funding generalist model bets anymore unless you're already one of the giants. They want proof the thing actually works inside somebody's workflow and saves them money doing it.

LaurenSo if you're a scrappy team trying to build the next foundation model from scratch-

DerekYou're not getting a check. That door's basically closed unless your name is one of four companies.

LaurenRight, because why would anyone bet against Anthropic on a general model when Anthropic's sitting on a round that size?

DerekExactly the logic investors are running.

LaurenIt's almost circular. The size of the round becomes the proof the bet was safe.

DerekSelf-fulfilling, yeah, which is a weird way to run a market, but here we are.

LaurenOkay, so hang on. Let's back up for a second. We spent this whole first part of the show on East Grand Forks, on the biotech incubator, the fintech fund, feeling pretty good about the world.

DerekYeah.

LaurenAnd now the actual scoreboard says four AI labs just soaked up two hundred and forty-two million dollars, and everybody else is fighting over the last fifty-eight.

DerekWhen you put it that way, it's not really one boom. It's one enormous boom and then a much smaller, much scrappier everything else.

LaurenSo if the money's stacking up that high at the very top, who's actually getting squeezed out down here?

DerekOoh, yeah, that's exactly where I wanna go next.

LaurenBecause eighty percent to AI mega-rounds means twenty percent for literally every other startup on Earth.

DerekEvery industry, every region, every founder who isn't building a frontier model.

LaurenThat's a very different show than the one we started with an hour ago.

DerekIt really is. Let's see who's actually standing outside that circle.

LaurenOkay, first stop on the excluded list. Louisiana KFF Health News reported that the state put out a call for rural health technology and got over two hundred pitches back.

DerekTwo hundred pitches for what exactly?

LaurenStates are literally betting rural health dollars on startups because doctors are leaving and hospitals are closing. Louisiana wants companies asking for somewhere between two hundred and fifty thousand and three million dollars.

DerekThat's not mega round money. That's rent and payroll money.

LaurenRight. That's the whole point. These are real problems, no doctor for fifty miles, being solved with seed checks, not billion-dollar term sheets.

DerekAnd none of them are touching that AI pile we just talked about.

LaurenAnd that gap between two hundred and fifty thousand and three million tells you something too. That's the difference between one clinic hiring a nurse practitioner and actually standing up a telehealth platform for a whole region.

DerekWhich is exactly the kind of unglamorous math that never makes it into a startup boom headline.

LaurenNone of them. Second one, Fortune's Gulf Brief this week.

DerekOh, tell me.

LaurenFortune wrote that the Gulf's female startup ecosystem is flourishing. Founders building real companies, real traction, but the funding for them is lagging way behind.

DerekFlourishing and underfunded. That's a weird combination to put in one headline.

LaurenIt's the whole segment in miniature. The activity's there. The checks aren't following it.

DerekAnd it's not like the demand for capital isn't there. The pipeline of founders is real. It's specifically who gets to close the round that's lagging.

LaurenSo the pitch decks are landing on desks. They're just not turning into wire transfers as fast.

DerekSwitching continents, Zawya had this one, a California pre-seed fund called Madica just put money into five African startups.

LaurenFive companies, one fund deliberately building out its footprint across African markets.

DerekFive. Compare that to four rounds closing in a single quarter for four companies we already named.

LaurenYeah, don't even say the number again. I can feel Derek wincing.

DerekI wasn't going to. I was gonna say Madica's whole strategy is pre-seed plural, spread out. That's the opposite shape of what's happening at the top.

LaurenIt's a totally different sport being played on the same field.

DerekAnd then there's deep tech. BeBeez reported forty startups and research spinoffs got shortlisted for the Global Deep Tech Showcase Awards.

LaurenForty across eight categories.

DerekQuantum computing, AI infrastructure, robotics, energy, biotech, space, the stuff that isn't a chatbot.

LaurenWait, AI infrastructure's in there too?

DerekAs its own category, separate from generative AI. So even inside deep tech, the generative stuff gets its own lane, and everything else gets grouped as the rest.

LaurenCute how that keeps happening.

DerekThough to be fair, forty finalists across eight categories is still a real showcase. Quantum and robotics teams are getting stage time, just not mega-round money.

LaurenStage time and seed money are not the same currency, unfortunately.

DerekEvery one of these, Louisiana, The Gulf, Madica's five, these forty finalists, they're all doing legitimate, needed work.

LaurenNobody's saying rural telehealth or quantum sensors are fake startups.

DerekNot fake at all. They're just not standing anywhere near the four labs that ate the mega-round.

LaurenDifferent building, not even the same block.

DerekSo the boom's real. It's just pick your zip code.

LaurenPick your zip code, pick your funding round size, pick your century, apparently.

DerekWhich honestly makes me wanna ask a meaner question.

LaurenGo for it.

DerekSay you're one of the lucky ones. Say you did land a real check. You're funded. You're not on this excluded list at all.

LaurenSure.

DerekSay you're on the lucky side of this divide.

LaurenSure.

DerekWhat actually keeps you alive when a frontier lab can turn around and ship your entire roadmap as a feature update?

LaurenOh, that's the mean question.

DerekThat's the question.

LaurenUh, sure. So here's the harder question. Even the startups that do get funded, what actually keeps them alive?

DerekRight. Because money doesn't equal survival. Funding just means you get more time on the clock before the real test starts.

LaurenThe real test being whether anyone still needs you in a year.

DerekTechCrunch is previewing a Disrupt 2026 panel about exactly this. A founder, an operator, and an investor all wrestling with the same problem.

LaurenWhich is?

DerekWhether you can build something customers still want after the next model release drops.

LaurenOh, that's brutal when you say it out loud.

DerekTechCrunch frames it as basically the defining question right now. You ship a product, and six months later, a frontier lab bakes your entire feature into their base model for free.

LaurenAh, so your moat just evaporates.

DerekOvernight, yeah.

LaurenI keep thinking about how fast that turnaround is now too. It used to take years for a big platform to copy a clever feature.

DerekNow it's a change log entry. One release note, and the thing you spent a year building is just included.

LaurenOkay, so if speed doesn't save you, what does?

DerekThat's the thing. Everybody assumes tools getting cheaper and faster makes founding a company easier.

LaurenDoesn't it, though? Cloud's cheap. AI writes your code. Funding's easier to find.

DerekForbes Technology Council members actually argue the opposite. Cheaper cloud, AI dev tools, easier funding access, they say that's raised the bar, not lowered it.

LaurenWait, how does easier access raise the bar?

DerekBecause if anyone can spin up a competitor in a weekend, customers stop being impressed by the product existing at all.

LaurenThey just assume it's table stakes.

DerekIt's wild how fast AI stopped being impressive and just became a checkbox in every pitch deck.

LaurenYeah, from differentiator to assumption in about 18 months.

DerekExactly. Forbes puts it as skepticism being the new default.

LaurenOh, skepticism is the new default. I mean, honestly, fair.

DerekPeople don't fund the demo anymore. They wanna know why you survive the next 18 months.

LaurenSo it's not a tools problem, it's a trust problem.

DerekTrust that compounds slowly and disappears instantly, which is a brutal trade for a founder to manage.

LaurenEspecially when you're also trying to hit growth numbers investors expect on a much faster clock.

DerekAnd a differentiation problem. If your whole pitch is we use AI too, that's not a pitch, that's a category.

LaurenRight. Everyone uses AI too.

DerekWhich is why the panel TechCrunch is running isn't asking who has AI, it's asking who has something an AI update can't just swallow.

LaurenA moat that isn't made of the same material as the thing trying to eat it.

DerekSo the founders who actually make it, they're not betting on being first. They're betting on something a model release can't just absorb, a relationship, a data set, a workflow nobody else has access to.

LaurenWhich loops right back to everything we talked about today, honestly.

DerekKinda does.

LaurenThe 17 local wins, the mega rounds, the excluded regions, it's all the same question underneath. What actually lasts?

DerekMoney buys you time. It doesn't buy you durability.

LaurenWhich honestly is a decent filter for judging any of the stories we covered today. Not did they raise money, but what happens to them the day the money runs out?

DerekThat's the only question that actually matters a year from now.

LaurenOkay, that's a good place to leave it. Actually, that's a great place to leave it for you listeners.

DerekUh-oh.

LaurenI wanna know what you're building or what you're watching get built that you think survives the next model release. Tell us.

DerekSend it our way.

LaurenWe're reading everything. So that's the shape of it. Headlines everywhere, money in a handful of hands, and building something that lasts is harder than the highlight reel makes it look.

DerekYeah. Every founder we mentioned today is playing the same game with wildly different rules.

LaurenRight.

DerekThink about it. A city agency counting startups as a quarter of its economy, and four labs a continent away swallowing 80% of the world's venture money. Same week, same word, boom, completely different stakes.

LaurenWhich is kind of the whole show in one sentence, honestly.

DerekAnd honestly, I don't think that changes next quarter.

LaurenWay to end on a cheerful note, Derek.

DerekEh, I said hard, not hopeless.

LaurenNo, that's fine. Hard I can work with. Hopeless would've ruined my Wednesday.

DerekWouldn't want that on my conscience.

LaurenFair. Okay, if you made it this far, do us a favor and hit subscribe wherever you're listening.

DerekLeave a review too. It actually helps people find the show.

LaurenAnd if you've got a tip, a story, a founder we should be talking to, there's a tip line in the show notes.

DerekUse it. We read all of it.

LaurenAll of it?

DerekMost of it.

LaurenI'll allow it, mostly because I know you actually forward me the good ones.

DerekOnly the good ones. The rest go straight to the void.

LaurenNew episodes drop every Wednesday.

DerekSo we'll see you then.

LaurenHonestly, the thing that stuck with me today isn't the number. It's how many people are still building without it.

DerekSomebody in Louisiana is still pitching for $250,000 this week. No mega round in sight, and they're doing it anyway.

LaurenThat's the actual pulse of the industry underneath all the noise about who raised what.

DerekYeah. That part I believe.

LaurenThis has been Tech Insider Weekly. Thanks for hanging out with us.