In today’s startup landscape, the clock is ticking faster than ever. With AI accelerating the pace of change, the world’s commercial engine is operating at warp speed —unlike anything we’ve ever seen. Entrepreneurs who choose to remain in 'stealth mode' might believe they’re exercising prudent caution, but that mindset is becoming a relic of the past.
Stealth Mode Was Cool A Decade Ago
I understand the allure of keeping a company in stealth mode during the early days. You have the tiger by the tail and want to ensure everything is just right before unveiling your vision to the world. After all, you don’t want to let the cat out of the bag too early and give your competition a head start (though they’re often too busy to care, by the way).
But this decision isn’t benign—and it’s not 2015 anymore. The risks of going the stealth route are significant. One of the biggest challenges is that you will likely struggle to build momentum when funding your startup. You let your greatest enemy (time) work against you by staying quiet. Stealth mode companies don’t attract capital as fast as loud and proud ones.
Let’s dig a little deeper...
AI Has Changed How We Build And Market Startups
Rewind the clock 12 to 18 months. Remember all those AI startups working on text-to-image generation?
Their platforms were fascinating in late 2022 and early 2023, and I anticipated explosive growth. But where are they now? Many are struggling and running out of funds. I know this because I was considering funding one of them, and during my due diligence, I familiarized myself with their competitive landscape.
Thankfully, I passed.
Today, that market is dominated by DALL-E, Midjourney, Stable Diffusion, and perhaps Gemini. The small, stealthy operators were crushed by their louder, better-funded competitors. This is the way things are in the 2020s.
Less than two years ago, these startups were brimming with potential. But they were too quiet, and consequently, there wasn’t a lineup of investors eager to fund their future development. Startups need pent-up demand for their equity, whether they’re conducting a raise at that moment or not. Demand grows when you make your progress public—the opposite of stealth mode.
Remember the Sora teaser?
Why did OpenAI release a teaser of their text-to-video generator, Sora, about six months ago, even though it’s still unavailable to the public? It created excitement and demand from investors, and because they’ve been a first mover with a proven track record of commercializing AI products, it added to their valuation. This strategic move was both calculated and effective.
It's been reported OpenAI is now pursuing a raise that would value the company around $100 billion.
Stealth Mode Is Just Fear
While you might attract one or two VCs or angels early on, in 2024, you will struggle to build a cohort of investors if you remain in stealth mode, no matter your sector. If you’ve read anything I’ve written about raising venture capital and seed funding, you’ll know I believe that true price discovery (valuation) comes from a group of investors, not just one or two VCs.
Additionally, investors talk. If you’re actively disclosing your business development and posting progress reports through press releases, newsletters, and social media, your early investors will become your greatest evangelists. Venture capital compounds. Investors love to talk, and their influence helps propel the next funding round.
Unless the tide is rising and lifting all boats, it is very hard for a startup in stealth mode to attract a sizeable lead order for a raise. Whether we want to admit it or not, angel investors and VCs love to jump on a moving train. They rarely want to be lone wolves.
So, ask yourself: Is staying in stealth mode worth the risk? Silence might be the loudest mistake you can make in a world moving at warp speed.
Move quickly,
Aaron
