Silicon Valley Observer Claims Neo Labs Valuation Bubble is Significant
Raymond shared insights from a 20-day visit to Silicon Valley on social media, pointing out that Thinking Machines Lab completed its seed round with a valuation of $12 billion, but the new round of financing has not closed, and secondary stock trading is active.
Statistics from Leonis Capital show that 119 Neo Labs have collectively sought about $94.3 billion from the market, with only 16 disclosing revenue, and most lacking clear product-market fit. Some investors still view professor-founded labs as a unique track, as early entry can provide a safety cushion for subsequent rounds.
Data companies have become a visible opportunity, with several generating revenue by selling data or acting as cutting-edge research partners, with individual high-value data points reaching tens of thousands of dollars, but project operation intensity is high, requiring 24-hour response. Some companies derive most of their revenue from data trading rather than core products.
The scale of AI-related mergers and acquisitions is significant, with publicly reported cases such as Cursor being acquired at a valuation of about $60 billion and World Labs being acquired by AMD for $8.2 billion. YC currently has about four batches per year, with each batch consisting of about 150 to 200 companies, totaling hundreds of companies annually.
Observers compare the current atmosphere to China's upward period from 2014 to 2015, believing that questioning depreciation and revenue matching is currently seen as a buzzkill. The number of Chinese entrepreneurs and investors is rising, with some funds focusing on Chinese projects that have settled in the Bay Area.
In terms of market mechanisms, capital continues to flow into research labs with no products or low revenue disclosure, creating pressure from discounted old shares and unresolved new rounds. Beneficiaries are teams that can quickly deliver data or be acquired, while those under pressure are Neo Labs, which rely on continued high-valuation financing but lack product-market fit.
Source: Public Information
ABAB AI Insight
Thinking Machines Lab was founded by former OpenAI executive Mira Murati, achieving a valuation of $12 billion in 2025 with about $2 billion in seed funding, but negotiations for subsequent financing rounds of $4 billion to $5 billion have repeatedly failed to close. Institutions like Leonis Capital have categorized similar research priority labs as Neo Labs and quantified their financing scale and revenue disclosure gaps.
In terms of capital pathways, funds enter labs through seed rounds and strategic investments, with some exiting or circulating at a discount through the secondary market. The professor and student founding pathway has gained early entry advantages due to U.S. universities' lenient policies on entrepreneurship, and acquisition cases (like World Labs) further strengthen the exit expectations of this pathway.
This is similar to the financing environment of some high-valuation companies with no revenue in the early mobile internet era of the 2010s. Currently, it is in an expansion phase prioritizing research, with products and revenue being secondary; most labs still rely on capital endurance rather than commercial cash flow.
Essentially, this is a concentration of capital. A large amount of funding is concentrated in a few star-backed labs, with the market pricing based on team reputation rather than current revenue; when subsequent rounds cannot close and the secondary market shows discounts, pricing power shifts from the founding team to secondary buyers and stricter subsequent investors, forcing some projects to accelerate data monetization or seek acquisition.
ABAB News · Cognitive Laws
Valuation can soar first, revenue must land
Professor background is the ticket, product is the seat
Discounted old shares are a signal, closing new rounds is confirmation