In early October, DualEntry, an AI enterprise resource planning (ERP) startup, announced a substantial $90 million Series A funding round led by prominent venture capital firms Lightspeed and Khosla Ventures, which has positioned the fledgling company at a valuation of $415 million just one year after its inception. The startup aims to modernize the ERP landscape by replacing established software such as Oracle NetSuite with an innovative solution that automates routine tasks and delivers predictive insights. The impressive funding round indicates that DualEntry may be experiencing significant revenue growth, as suggested by the enthusiasm of its investors.
However, there are discrepancies when it comes to the company’s annual recurring revenue (ARR). A venture capitalist who opted not to invest in DualEntry disclosed to TechCrunch that their ARR stood at approximately $400,000 during his review of the deal in August. DualEntry’s co-founder, Santiago Nestares, refuted this figure, asserting that the revenue at the close of the funding round was “considerably higher than that,” although detailed figures remain undisclosed.
This remarkable valuation relative to revenue highlights a broader trend among leading venture capital firms known as “kingmaking.” This investment strategy involves directing significant capital to a chosen startup within a competitive category, allowing it to outpace competitors through financial advantage, thereby creating the impression of market dominance.
Industry experts observe that while the concept of kingmaking is not new, its execution has evolved. Jeremy Kaufmann, a partner at Scale Venture Partners, explained that venture capitalists traditionally evaluate competitors and make informed bets on market leaders, but now they are often making these large investments much earlier in the startup’s life cycle.
In this context, the approach stands in stark contrast to the previous investment cycle, which relied on “capital as a weapon.” David Peterson of Angular Ventures noted that the tactic was famously illustrated by the massive investments poured into ride-sharing giants Uber and Lyft, which did not benefit from this level of funding until they reached later funding stages, such as Series C or D.
In a rapidly evolving landscape, competitors of DualEntry, like Rillet and Campfire AI, are similarly attracting substantial investments. Rillet raised $70 million in a Series B led by a16z and Iconiq shortly after an earlier $25 million Series A funding led by Sequoia. Meanwhile, Campfire AI has successfully closed two consecutive funding rounds, securing $65 million in its Series B, following a $35 million raise in its Series A.
This pattern is prevalent across multiple AI application categories, with numerous startups achieving funding success in quick succession. Jaya Gupta, a partner at Foundation Capital, highlighted that Series B rounds often occur just 27 to 60 days after Series A rounds in the AI ERP space, as well as in categories like IT service management and SOC compliance.
While some startups like Cursor or Lovable have reportedly excelled between funding rounds, others characterized by modest revenue growth remain a concern. Many venture capitalists convey that several AI ERP startups that raised late-stage financing in 2025 still report ARR figures in the single-digit millions.
Although opinions differ among investors regarding the viability of kingmaking as an investment strategy, many believe that significant funding can provide a competitive edge, even for startups that operate with lower burn rates. Well-established companies are perceived as more stable and attractive to significant enterprise clients, which can influence vendor preference. This was a strategy that proved effective for legal AI company Harvey in securing partnerships with large law firms.
Despite historical examples of failures within this investment model, such as Convoy and Bird, major VC firms remain undeterred. They continue to invest in promising categories that leverage AI technologies. As Peterson articulated, investors are cognizant of the lessons learned from the power law of venture capital; in prior years, companies like Uber demonstrated exponential growth unanticipated by many, making it difficult to consider early investors as having overpaid for their stakes.
