Tech founder I met recently runs a four‑year‑old AI firm that raised $10 million at a $40 million valuation two years ago, yet still reports no revenue. He and his backers now chase an exit that would lift that valuation. Itay Sagie argues the gap between founder hopes and buyer reality often seals deals before negotiation even starts.

Sagie cites large‑scale deals, like Microsoft’s $650 million licensing and talent package with Inflection AI, and Amazon’s similar moves, as outliers that can’t be the rule. While the tech and teams are enticing, buyers weigh proven revenue, growth, retention and how smoothly a product plugs into their existing ecosystem. These metrics anchor realistic valuations for growth.

When founders lean on hype instead of traction, the mismatch widens. Investors who raised capital at a certain valuation set a baseline that founders expect to surpass, while buyers focus on current performance and synergy potential. Without aligning expectations early, a deal stalls or collapses, costing both parties time and capital. This misalignment erodes investor confidence.

Sagie’s warning underscores that AI starts to look like a bubble when valuations outpace fundamentals. For executives, the takeaway is simple: build a clear, data‑driven narrative that matches market expectations. Firms that can demonstrate revenue growth and seamless integration will attract buyers willing to pay a premium, while those that cannot will see deals dissolve before closing.