Peak XV's Singh Predicts Venture Correction by 2027 as Series A Terms Fracture

A correction in venture funding could arrive as soon as 2027, according to Shailendra Singh, a managing director at Peak XV, who told founders at this year's TechCrunch Disrupt that the Series A market is now one of the hardest to raise in he has ever seen.

"Seed and venture, I've never seen it as dysfunctional as it is now," Singh said. He spoke alongside Jahanvi Sardana, a partner at Index Ventures, and Jenelle Teng Wade, a partner at Bessemer.

Singh's diagnosis: capital is pouring into AI, revenue numbers are getting inflated to justify sky-high valuations, and no single metric defines what a Series A is anymore.

How broken are Series A terms right now?

Very, by Singh's account. "The burden is high to convince any top firm that you are amongst the few special companies that can break out, and then the dispersion is very high on the terms you might get, how much capital you can raise, and what terms you can raise it," he said.

It's now common, he noted, to see a company trying to close a single round with as many as three different prices at once. "[I]t's a crazy sign of market froth," he said.

Sardana has a name for the way rounds get split into separate chunks: "We're calling it the 'tranchopalooza.'"

What do investors actually look for?

The panelists laid out their criteria:

• A persuasive story. Founders need a credible case for why they can build a big company.
• Talent pull. "Founders who can attract very high-quality talent have an advantage," Singh said.
• The right sector. Teng Wade said capital is flowing into defense, robotics, and AI infrastructure.

Foundational model companies are moving toward vertical integration, taking on more of the stack themselves, Teng Wade said. But newer players still have room, including neo-clouds that rent out AI computing power and neo-labs focused on AI research.

Do metrics still matter at Series A?

Yes, but they're less defined than they used to be, particularly in AI, where running a company is incredibly expensive.

Teng Wade described how Bessemer evaluated Anthropic in its early days, when its margins were negative and it was spending heavily on compute. One partner on her team felt AI was going to be "bigger than everything we've ever expected in terms of price premium on the frontier models," she said, "becoming a substitute for other types of software."

The logic: even with money-losing margins, the market would be big enough to pay off if the company became one of the top three players. Anthropic is now reportedly preparing an IPO at a valuation of around $2 trillion. It told investors this month it was profitable on an adjusted basis, though that measure excludes some costs.

Why honesty is the dealbreaker

With inflated annual recurring revenue figures swirling alongside headline valuations, the investors stressed intellectual honesty in pitches.

"I tell founders, If you ever show a chart which shows cumulative revenue or cumulative ARR, that is a massive red flag," Singh said. "It means that your time series data is not good because cumulative data is a big lie."

He added that it's important for a company to be "intellectually honest" in how it presents and engages in bull cycles. The market, he argued, is full of "false positives" because "it can't be that every company is going to be successful."

"This is as optimistic as I've seen the venture world in two decades, and normally it's a sign," Singh said. "I think 2027 will be different. I think we will see a correction."

What should founders do?

Singh reminded founders that building a company is one of the "most excruciatingly difficult things" one can do — and with that, "deal with it." He urged founders not to rush, to watch out for weak product-market fit, and to hold the bar very high for what they're trying to solve.

Sardana said founders should know how to pitch but shouldn't let pitching dictate what they build. "It feels like [founders are] deciding what to build based on what's getting funded, which is really scary," she said.

Teng Wade's old advice — be conservative with projections and requests — hasn't held up in this market. "I would say just be audacious in your ask," she now says, and see how the market responds, "and then you can tailor from there."

For founders heading into a Series A, the panel's message cuts two ways: ask boldly now, because the window — and the froth — may not survive past 2027.