Notorious #128: Themes from the Fastest Growing AI Startups

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Themes from the Fastest Growing AI Startups

AI-native startups are rewriting the traditional playbook for software growth, scaling faster and leaner than anything we've seen in SaaS history. Whether targeting developers, creators, infrastructure, or enterprise workflows, the most successful companies share a few defining traits: they’re deeply integrated into user workflows, move at blistering speeds, and rely on product-led growth to drive viral adoption. This wave isn’t just about adding AI features, it’s about reimagining software from the ground up for an AI-first world.

PLG Developer-Focused Apps

We’re seeing developer-first AI startups scale at breakneck speed by deeply integrating into existing workflows and letting product value drive adoption in the product development process. Cursor, Codeium, Bolt and Lovable are all hitting tens of millions in ARR with teams under 50 by solving acute pain points (e.g. writing, editing, or generating code/apps) and offering great UX with minimal friction and expanding the audience of application development. Cursor went from zero to $100M ARR in just 12 months with under 20 people and no marketing, likely the fastest SaaS growth curve on record. Unlike incumbents who bolted on AI features, Cursor was purpose-built for an AI-first coding experience, helping developers describe what they want in plain English and generating production-ready code with minimal effort. This AI-native orientation allowed it to move quickly and offer a cleaner UX than legacy IDEs, creating viral pull across the dev ecosystem.

The common theme is developers discovering, loving, and sharing these tools organically. Community (GitHub stars, Twitter demos, Discords), rapid iteration, and dead-simple onboarding drove viral growth without traditional sales. Codeium crossed $40M ARR with 700K+ devs. Bolt hit $20M ARR in just 8 weeks by letting users build full-stack apps with a single prompt, expanding reach to non-technical creators. Even Cognition Labs’ Devin, positioned as the first AI software engineer, leveraged buzz, benchmarks, and exclusivity to drive thousands of inbound pilots pre-GA. These startups aren’t just replacing tools, they’re redefining workflows. Cursor in particular benefited from counter-positioning against slower-moving IDEs and rapid execution speed, a temporary but powerful edge. We’re especially excited by the velocity at which usage turns into revenue, often without CAC, and the potential to expand from individual devs to org-wide adoption with near-zero friction.

PLG Prosumer Creative Tools

Creative AI apps like Midjourney, Captions, Photoroom, and ElevenLabs have unlocked a viral loop: users create content with them, then share it across social platforms, turning every output into distribution. Midjourney scaled to $300M in revenue in 2024 (up from $50M in 2022), entirely bootstrapped and without a sales team, by building a thriving Discord-native community and delivering stunning outputs that fueled organic growth. ElevenLabs surged from $25M to $90M ARR in under a year, driven by its Creative Studio, which lets creators generate multilingual, lifelike voiceovers that power content creation across platforms. Photoroom, now at $50M ARR with 200M+ users and 4M monthly downloads, has become essential for millions of SMBs and creators producing high-quality product visuals and social media content.

We see these companies as proof that prosumer AI can scale like SaaS, with stronger virality and lower CAC. Their growth is powered by community, shareability, and fast product iteration. They convert casual creators into power users with clear value, simple pricing, and constant delight. Their models scale well: Midjourney and Photoroom are profitable, Runway is layering in B2B and API channels, and Pika is turning its Discord-native community into a consumer video platform. The creative AI stack is one of the clearest opportunities for mass-market PLG in the AI era, and these companies are defining the playbook.

AI Model Development and Deployment Infra

Together.ai, Modal, Fal.ai, Fireworks, and Mercor are scaling rapidly by building core infrastructure for training, deploying, and operating AI models. Together.ai reached $100M+ in annualized revenue within two years by offering lower-cost, open-weight model training and inference—making it the go-to partner for startups looking for more control and lower infra costs. Modal is building a serverless GPU platform with over 10,000 developers, focusing on developer experience and lightning-fast deploys—positioning itself as a Vercel for AI workloads. Fal.ai went from $1M to $40M run rate in one year by specializing in multimedia inference, serving customers like Quora and Adobe. Fireworks.ai brands itself as the fastest inference engine and has grown to double-digit millions in run rate revenue, with customers including DoorDash, Notion, and Uber. These companies have grown fast by staying programmable, cost-efficient, and tuned for modern AI-native workloads.

Mercor, while adjacent, plays a critical role in powering human-in-the-loop model training. It built a global labor marketplace for prompt evaluators, data labelers, and QA workers—now serving OpenAI, Anthropic, and more. The company surpassed $100M in ARR by automating sourcing, vetting, and task routing, becoming the ops layer for high-quality data pipelines. What unifies this group is their focus on removing the core bottlenecks in the modern LLM stack—whether compute, inference latency, customization, or training data ops. This isn’t about competing with AWS, it’s about owning the high-leverage primitives the next generation of AI builders depend on.

First-Mover AI Applications

First-mover applications like Harvey, Sierra, and Decagon have rapidly gained traction by targeting high-value enterprise workflows with innovative AI solutions in areas where copilots or agents have clear initial ROI and value. Harvey has established itself as a leader in legal AI, securing firm-wide deployments at Allen & Overy and PwC, achieving over $50M in Annual Recurring Revenue (ARR) across more than 200 law firms, and raising $300M at a $3B valuation (with some of that contracted but not live yet). Sierra, led by Bret Taylor, focuses on automating customer support using LLMs and has initiated numerous Fortune 500 pilots by offering seamless integrations and a compelling "replace Zendesk" value proposition. Decagon specializes in AI-powered customer support agents and has experienced significant growth, raising a total of $100M in funding, including a $65M Series B led by Bain Capital Ventures, to enhance enterprise customer support through automation and efficiency. ​

A common thread among these companies is their swift establishment of enterprise trust. They recognize that in regulated and reputation-sensitive industries, delivering not only advanced AI models but also ensuring security, transparency, and enterprise-grade workflows is crucial. Their go-to-market strategies emphasize credibility and relationship-building: Harvey leverages backing from OpenAI and references from prestigious law firms; Sierra utilizes founder-led go-to-market approaches and rapid integrations; and Decagon invests in domain expertise and compliance-ready solutions in an area where agents are showing clear ROI. By earning trust and securing early enterprise adoption, these companies are poised to become the next-generation systems of record in sectors where switching costs are high, and incumbents are slow to adapt.

Conclusion

Each of these segments—developer tools, creative prosumer apps, infra platforms, and first-mover enterprise agents—offers a glimpse into the playbook of tomorrow’s iconic companies. They move fast because the market rewards speed. They scale efficiently because the product sells itself. And they win not just by solving problems, but by reshaping the way work gets done. As AI-native startups continue to mature, the most enduring ones will be those that combine world-class product execution with structural advantages like low CAC, viral adoption, and clear paths to enterprise expansion. This is just the beginning.

Thanks for reading. By way of background, I am an early-stage investor at Wing and a former founder. Please reach out to me on X @zacharydewitt or at zach@wing.vc. Some of the early-stage PLG + AI companies that I have the privilege to work with and learn from are: AirOps, Copy.ai, Deepgram, Hireguide, Slang.ai, Tango and Workmate.

Operating Benchmarks (from PLG Startups):

I will continue to update these metrics and add new metrics. Let me know what metrics you want me to add (zach@wing.vc)

Organic Traffic (as % of all website traffic):

• Great: 70%

• Good: 50%

Conversion rate (website → free user):

• Great: 10%

• Good: 5%

Activation rate (free user → activated user):

• Great: 50%

• Good: 30%

Paid conversion rate (free user → paid user):

• Great: 10%

• Good: 5%

Enterprise conversion rate (free user → enterprise plan):

• Great: 4%

• Good: 2%

3-month user retention (% of all users still using product after 3 months):

• Great: 30%

• Good: 15%

Conversion from waitlist to free user:

• <1 month on waitlist: ~50%

• >3 months on waitlist: 20%

For more detail on acqusition rates by channel (Organic, SEM, Social etc), please refer to this prior Notorious episode.

Financial Benchmarks (from PLG Public Companies):

Financial data as of previous business day market close.

Best-in-Class Benchmarking:

15 Highest EV/ NTM Revenue Multiples:

Complete Dataset (click to zoom):

Note: TTM = Trailing Twelve Months; NTM = Next Twelve Months. Rule of 40 = TTM Revenue Growth % + FCF Margin %. GM-Adjusted CAC Payback = Change in Quarterly Revenue / (Gross Margin % * Prior Quarter Sales & Marketing Expense) * 12. Recent IPOs will have temporary “N/A”s as Wall Street Research has to wait to initiate converge.

Recent PLG + AI Financings:

Seed:

• Arcade, an AI agent infrastructure startup, has raised $12M. The round was led by Laude Ventures, with participation from Flybridge Capital Partners, Hanabi Capital Management and Neotribe Ventures.

• Augment, a startup building an AI assistant for the logistics industry, has raised $25M. The round was led by 8VC, with participation from Applico Capital.

• Rerun, a company building a multimodal data stack for Physical AI, has raised $17M. The round was led by Point Nine Capital, with participation from Costanoa Ventures, Seedcamp and Sunflower Capital.

• Town.com, a tax advisory platform designed to empower small businesses with AI-enhanced expert guidance, has raised $18M. The round was led by First Round Capital, with participation from Conviction Partners, Alt Capital, Depth Capital Ventures, Mischief, WndrCo and Position Ventures.

• Vallor, an AI-powered contract management platform intended to automate tasks and optimize contracts, has raised $4.2M at a $16.2M valuation. The round was funded by Bloomberg Beta, Right Side Capital Management and Forum Ventures.

Series A:

• Gradial, a startup developing AI marketing operations agents, has raised $13M at an $85M valuation. The round was led by Madrona Venture Group, with participation from DLA Piper, General Advance, Outsiders Fund and Pruven Capital.

• Multiply Mortgage, a financial technology company making homeownership accessible through employer benefits, has raised $23.5M. The round was led by Kleiner Perkins, with participation from Mischief, A*, BoxGroup and Workshop Fund.

• Numeral, a startup that handles sales tax compliance for both ecommerce and SaaS companies, has raised $18.13M at a $97M valuation. The round was led by Benchmark Capital Holdings, with participation from FundersClub, Uncork Capital and Y Combinator.

• Prezent, an enterprise business storytelling platform for business communication, has raised $20M. The round was led by Greycroft, with participation from Zoom Ventures, Manulife, Alumni Ventures, BluePointe Ventures, Emergent Ventures, WestWave Capital and True Global Ventures.

• Utila, an institutional digital assets operations platform that helps organizations securely manage and build on digital assets, has raised $18M. The round was led by Nyca Partners, with participation from Wing VC, NFX, Haymaker Ventures, Gaingels and Cerca Partners.

Series B:

• Graphite, an AI-powered code review platform, has raised $52M at a $292M valuation. The round was led by Accel, with participation from Shopify Ventures, Anthropic, Figma Ventures, Andreessen Horowitz, The General Partnership and Menlo Ventures.

• Cognition, an AI-powered coding assistant, has raised $120M at a $4B valuation. The round was led by 8VC, with participation from Founders Fund, Khosla Ventures and Conviction Partners.