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AI Startup Metrics & Valuations 2026
By TLDL
AI startup valuation benchmarks and investment framework. ARR multiples, growth rates, and what investors are paying in 2026.
AI Startup Metrics & Valuations 2026
Valuation benchmarks and metrics for AI investors.
Current Market Reality (Feb 2026)
Valuation State
- Foundation models: 20-50x ARR (down from 100x in 2023)
- AI infrastructure: 15-25x ARR
- AI applications: 8-20x ARR (highly variable)
Key Trends
- Revenue matters more - No revenue = $0 valuation
- Gross margins critical - Below 60% = problematic
- Burn rate scrutinized - Path to profitability now required
- Down rounds happening - 20-30% of 2024 raises
Stage-Based Metrics
Pre-Seed / Seed
| Metric |
Good |
Great |
Red Flag |
| Users |
1K+ DAU |
10K+ DAU |
<100 |
| Growth |
20% MoM |
50%+ MoM |
<10% |
| Engagement |
5 min/day |
15+ min/day |
<1 min |
| Team |
2 founders |
2+ technical |
Solo non-technical |
Series A
| Metric |
Good |
Great |
Red Flag |
| ARR |
$1M |
$3M+ |
<$500K |
| Growth |
3x YoY |
5x+ YoY |
<2x |
| NPS |
40+ |
60+ |
<20 |
| Retention |
90% MoM |
95%+ MoM |
<80% |
Series B
| Metric |
Good |
Great |
Red Flag |
| ARR |
$10M |
$25M+ |
<$5M |
| Growth |
80% YoY |
150%+ YoY |
<50% |
| Gross Margin |
70% |
80%+ |
<60% |
| NRR |
110% |
140%+ |
<100% |
Series C+
| Metric |
Good |
Great |
Red Flag |
| ARR |
$50M |
$100M+ |
<$25M |
| Growth |
50% YoY |
100%+ YoY |
<30% |
| Gross Margin |
75% |
85%+ |
<65% |
| EBITDA |
Positive |
20%+ margin |
Negative |
AI-Specific Metrics
Model Performance
| Metric |
Benchmark |
Notes |
| Token cost |
<$1/1M input |
Falling 50%/year |
| Latency |
<500ms p99 |
Critical for UX |
| Accuracy |
+5% vs baseline |
Measurable improvement |
| Cost/response |
<$0.01 |
Must scale |
User Engagement
| Metric |
Good |
Great |
| Messages/user/day |
5+ |
20+ |
| Feature usage |
30%+ using AI |
60%+ |
| Return rate |
40% weekly |
60% weekly |
Business Metrics
| Metric |
Formula |
Good |
| Revenue/user |
ARR / MAU |
>$10 |
| Support cost reduction |
% decrease |
>30% |
| Conversion |
Trial → Paid |
>20% |
Unit Economics Deep Dive
The Math
Gross Margin = (Revenue - COGS) / Revenue
- AI Apps: 70-85% (mostly compute)
- AI Infrastructure: 50-70% (heavy compute)
- Traditional SaaS: 75-85%
CAC = Sales + Marketing spend / New customers
- Good: <$1000
- Great: <$500
- Bad: >$5000
LTV = Margin × Customer lifespan
- Good: 3x CAC
- Great: 5x+ CAC
- Bad: <1x CAC
Payback = CAC / (Margin × MRR/customer)
- Good: <12 months
- Great: <6 months
- Bad: >24 months
Common Failure Modes
- Compute costs = COGS - Low gross margin
- Freemium abuse - High usage, low conversion
- Enterprise sales cycle - >12 months payback
- Model API dependency - No margin control
Valuation Multiples by Category
Foundation Models
| Stage |
Multiple |
Rationale |
| Seed |
30-50x ARR |
Platform optionality |
| A |
20-40x ARR |
Product traction |
| B |
15-30x ARR |
Revenue scaling |
| C+ |
10-20x ARR |
Proven model |
AI Infrastructure
| Stage |
Multiple |
Rationale |
| Seed |
20-30x ARR |
Tech differentiation |
| A |
15-25x ARR |
Customer references |
| B |
10-20x ARR |
Scale evidence |
| C+ |
8-15x ARR |
Predictable growth |
AI Applications
| Stage |
Multiple |
Rationale |
| Seed |
15-25x ARR |
Founder quality |
| A |
10-20x ARR |
Product-market fit |
| B |
8-15x ARR |
Growth rate |
| C+ |
5-12x ARR |
Revenue maturity |
Due Diligence Deep Dive
For AI Companies
Technical DD
- Model architecture - Proprietary vs fine-tuned?
- Training data - Where does it come from?
- Inference costs - What's the cost structure?
- Evaluation - How do you measure quality?
- Roadmap - What's the technical plan?
Business DD
- Revenue - Verified by Stripe/API?
- Customers - Who are they? (3+ references)
- Churn - Why do customers leave?
- Competition - How do you differentiate?
- Team - Can they execute?
Red Flags
- "We're building GPT-5 competitor" - Unless you have $5B+
- No revenue but high valuation - Show me the money
- Heavy LLM reliance - What's your moat?
- Burning $10M+/year - At what revenue?
- Team can't code - At least one technical founder
Investor Terms to Negotiate
Founder-Friendly
- 1x liquidation preference
- 4-year vesting, 1-year cliff
- Single triggers for acceleration
- Pro-rata rights
Investor-Friendly
- Participation up to 2x
- Board control
- Full ratchet
- MFN clauses
Last updated: February 2026
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