State of Startups and AI 2025 - Sarah Guo, Conviction

Summary

• Conviction (Cursor, Cognition, Mistral, Thinking Machines, Harvey, Open Evidence investor) sees companies hit $10–100M ARR faster than any prior tech cycle
• Reasoning is the new scaling vector — unlocks high-stakes, sequential, search-style problems and is why labs love it (more compute, more output)
• Agent startups in Conviction's Embed grant program grew 50% YoY and many are actually shipping revenue
• Multimodal is real business now: HeyGen, ElevenLabs, Midjourney each past $50M ARR; voice is the first enterprise modality because workflows like medical consults and lead-gen already use it
• GPT-4 went from $30/M tokens to $2 in 18 months; distilled versions ~$0.10 — model layer is more competitive (Anthropic and Google gaining share on OpenAI per OpenRouter data)