Why AI startups are selling the same equity at two different prices

In an increasingly competitive environment for venture capital, AI startups are employing novel pricing structures to manufacture a perception of market dominance, often by selling equity at two different prices within the same funding round. This tactic consolidates what would typically be two separate funding cycles. For instance, Aaru raised a round where a lead investor, Redpoint, placed a large portion of its investment at a $450 million valuation and a smaller portion at a $1 billion valuation, with subsequent investors joining at the higher price. This allows the startup to immediately claim a 'unicorn' status (over $1 billion valuation) based on the headline number, which serves to intimidate competitors and attract talent. Investors view this as a competitive move to win deals. However, some VCs criticize this as bubble-like behavior, noting that a company cannot legitimately sell the same product at two prices. While lead investors often receive preferential pricing for their market signaling, later participants pay a premium simply to secure a spot on the cap table. The risk is that the company is now expected to raise its *next* round above the high headline price; failing to do so results in a punitive down round, which can erode confidence among employees, partners, and future investors.

(Source：TechCrunch)