In a new Crunchbase op-ed, Alpha Managing Partner Steve Brotman makes the case that while venture may look healthy at the top, the reality for most startups is far more precarious. The market isn’t bouncing back, it’s bifurcating.
Capital is surging into the extremes of pre-seed founders hustling for angel checks and AI mega-unicorns raising billion-dollar rounds. Everyone in the middle — such as companies with real customers, revenue, and a shot at $1-3 billion outcomes — is being left behind. “These aren’t just big checks,” Brotman writes. “They’re gravitational anomalies distorting the rest of the ecosystem.”
Brotman points to the $70 billion raised by just 11 companies in the first half of 2025, including OpenAI and Scale AI’s record-setting rounds. It’s a level of capital concentration that skews investor behavior and squeezes out solid, but not flashy, growth-stage startups.
That’s where Brotman sees the greatest risk and the greatest opportunity. These middle-market companies, often 6-10 years old, flirting with profitability, and grinding toward category leadership, are too mature for seed dollars and not hype-fueled enough for the billion-dollar club. And yet, they’re where some of the most compelling value creation is happening.
Brotman draws a comparison to the dot-com era, where investors massively overfunded infrastructure plays and waited years for the application layer to catch up. Today’s AI boom is following a similar path. But he argues that this overbuild could set the stage for a new generation of lean, capital-efficient startups to break out, without needing $500 million to do it.
“The second half of 2025 is going to expose which bets are real and which were just expensive storytelling,” he writes. “This isn’t a moment for tourists, it’s a moment for conviction.”
At Alpha Partners, that’s exactly where we focus: activating pro rata rights in top-performing portfolio companies that are scaling quietly and sustainably. These companies may not be chasing headlines, but they’re building real businesses and doing it with less capital, more clarity, and stronger fundamentals. Because in five years, the spotlight may still be on the unicorns. But the smart money will be on the companies that made it through the middle.
Read the full article here.
