Allied Venture Partners

Hello Partners,

As a current or prospective partner, this newsletter provides exclusive insights into our investment strategy, portfolio companies, and industry trends.

Thank you for your continued trust and support,

Matt Wilson

Founder & Managing Director | Allied Venture Partners

Not an LP? Click here to join the Allied Venture Partners syndicate.

Team Updates

• Our core team includes Steve, Melinda, Brendan, and Leia.

• Leia joins the team as our new AngelList administrative lead – Welcome Leia!

• The Allied Scout and Advisory programs continue to expand with several new members each week, providing quality diversified deal flow from across Canada and the United States. If you know a great startup that we should meet, please introduce us!

New Deals

• We closed one new investment earlier this month that has yet to be publicly announced. I’ll share more details once available. Thanks to everyone who participated.

• It’s shaping up to be a busy fall. We have several exciting new investments in the pipeline that I look forward to sharing in the coming weeks.

• New LPs can join the Allied syndicate and gain access to our dealflow at no cost by clicking here.

Portfolio News

• GroWrk continues to incorporate AI into its platform with the recent launch of their AI Insights feature.

• Rook signed Pepsi to a long-term contract following a highly successful six-month pilot. A big congratulations to Marco and the Rook team!

• doFlo introduced their new Vibe Flowing product, which enables agentic AI workflows from a single prompt.

• Thanks to Marian and the Between Meetings Podcast for inviting me to join the show. We had a great discussion about startups, angel investing, and the local startup ecosystem.

Industry Insights

Following my commentary in last month’s newsletter on multi-layer SPVs, I thought I’d share this article that was published shortly after, reiterating what I highlighted.

It’s interesting to see CEOs stepping forward and publicly warning against unauthorized SPVs, stating that such transactions "will not be recognized and carry no economic value.”

Many disappointed LPs who believed they were investing in the hottest AI companies will likely have their funds returned (minus administrative fees). This is predatory bubble behavior, and the only ones who profit are the brokers.

In my opinion, LPs seeking exposure to leading AI companies should simply buy a NASDAQ ETF [not financial advice].

Moving on…

I recently met a startup fresh from a top-tier accelerator program that oversubscribed a $3.5 million seed round at a $35 million post-money valuation (a 140x implied revenue multiple) for a product that Google already offers for free.

With sub-$20k MRR and what appeared to be an inferior product, this deal exemplifies a broader challenge facing our industry – a valuation disconnect that stems from two converging forces:

First, the AI landscape is evolving so rapidly that even full-time investors are struggling to maintain comprehensive competitive intelligence. New capabilities emerge weekly, creating blind spots in due diligence processes that once relied on stable market maps.

Second, the "AI premium" has become self-reinforcing, where investors fear missing transformative opportunities more than they fear overpaying for incremental innovation.

The company I’m referring to may indeed carve out a meaningful niche within its targeted segment, but from an investment perspective, the venture math simply doesn’t work. Growing into a 140x multiple requires either extraordinary execution or significant market expansion—both increasingly difficult when competing against well-resourced incumbents offering comparable solutions at zero cost.

Most ironically, the company uses a combination of foundational models, including Google Gemini. So, in essence, they are selling an inferior product to customers who unknowingly have free access.

As an investor, this fast-paced environment certainly demands enhanced diligence frameworks. At Allied, we've integrated systematic competitive analysis using advanced research tools, including daily monitoring reports that track emerging players and product launches.

The key insight isn't avoiding AI investments—it's distinguishing between companies building genuine moats versus those riding the wave of category enthusiasm.

We saw this same pattern after the 2021 boom, and we’re still dealing with the aftermath of recaps and down-rounds from startups that failed to grow into frothy valuations.

As pricing discipline eventually returns, I expect valuations to realign with fundamentals, rewarding startups that demonstrate clear differentiation rather than mere category participation.

As a reminder, our Core Investment Values since Day 1:

Read our investment thesis one-pager, available here.

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Disclaimer: The information provided herein is for informational purposes only and does not constitute financial, investment, tax, or legal advice. Individuals should consult their own professional advisors before making any investment decisions. Past performance is not indicative of future results.