For traditional SaaS companies, funding follows traction. Your revenue grew, you expanded your customer base, and then you presented that proof to investors to secure funding.
But AI companies don’t follow the same rules, a situation we’ve dubbed the AI funding Paradox. This change is part of a larger shift in how AI companies are running PR playbooks.
Investors are willing to fund companies based on technical talent and a credible thesis before conventional customer proof. We saw this with Mistral AI, which raised a $113 million seed round just weeks after founding without a public product. Safe Superintelligence secured a whopping $1 billion with zero initial revenue.
Venture capital has moved from a model of risk-mitigation in scaling to one of high-stakes infrastructure bets. Building frontier AI models requires massive upfront capital long before it’s time for go-to-market execution, and now the investment ecosystem is prioritizing raw technical capability and speed over early unit economics.
This funding-first approach creates a unique PR problem that not many startups are ready to address. The funding announcement is big news, but maintaining coverage momentum can be challenging without a customer. The secret is to tell a compelling story.
How the big raise can backfire for pre-traction AI startups
Your big funding announcement got great coverage. Reporters wrote about the valuation, interviewed your founder, and quoted your investors. Seemingly overnight, you have a market presence you didn’t have just a few days earlier.
But a company that treats its funding announcement as the entire PR strategy can end up with an awkward gap between the initial attention and delivered proof. They lose their momentum.
Not having customers is no reason to hide from media. If you want your PR approach to be impactful long-term, you need consistency in messaging and outreach efforts. Use the funding announcement to establish a narrative that can develop as the company gains traction.
How to create a narrative pre-traction
There are four key pillars to creating a narrative that resonates with the media pre-traction that can carry you into the next phase of growth:
- Anchor to a defensible market thesis (not just a massive total addressable market): The size of the market cannot do all the heavy lifting for you. You need to explain why what you’re doing is possible now when it wasn’t before. Your funding announcement is an opportunity to connect with journalists and get them to understand your company’s thesis.
- Name the problem early: Too often, companies that are pre-traction struggle to describe themselves because they are creating a category. Put a specific name to the challenge or solution. For example, if you serve legal firms, you aren’t an AI legal software. That tells a reporter very little. Get more specific. Describing yourself as a Deterministic AI for Legal Workflows tells a bigger story.
- Leverage your technical and team credibility: Being pre-traction means customer proof doesn’t exist, but that doesn’t mean there aren’t other forms of evidence you can provide. AI companies need to establish credibility and trust. Where did the founders work before starting their own companies? What projects did they lead? How did they discover this gap in the market?
- Radical honesty: Be open and honest with the media about where you currently stand. This is the hardest part for companies to be comfortable with. Reporters are becoming increasingly skeptical of an AI company’s claims. Explain the problem you’re solving and why you’re the one who can solve it. Be straightforward and realistic.
It’s fine not to have traction yet, as long as you can explain to the media why that is. Some founders view this as an apology for being early. It’s actually a teaching moment to go over what you’re building, why you’re building it, and what the next steps look like.
The AI funding paradox requires a different PR playbook than traditional SaaS raises. For more, we put together an FAQ about what AI founders and GTM leaders are actually asking.
Have more questions? Talk to the PANBlast team.
This article was written as a collaboration among Connor Lynch, John Hiltner, and Jake Doll.