A massive valuation for a "seed" round can be misleading. Often, insiders have participated in several unannounced, cheaper tranches. The headline number is just the final, most expensive tier, used to create FOMO and set a high watermark for new investors.

Announce a smaller fundraising target than you ultimately need. It is far easier to get 80% committed to a $250k round than a $2M round. Once you're heavily subscribed, the FOMO makes it easier to expand the round size, as being "oversubscribed" is like catnip to VCs.

Instinct claims its invite-only rollout is due to compute constraints, but it's likely a strategic marketing move to generate exclusivity and demand. This manufactured scarcity, reminiscent of Clubhouse's early strategy, drives user interest in a crowded AI agent market.

Anthropic's "Project Glasswing," offering limited access to its powerful Mythos model, is more than a safety measure. It's a savvy marketing play creating exclusivity and scarcity. This drives a "fear of missing out" (FOMO) among potential customers, building hype and demand ahead of its IPO.

Beehiiv's founder sends investor updates to both backers and VCs who passed on investing. This tactic keeps potential future investors warm without time-consuming meetings and creates powerful FOMO. This strategy helped them raise their Series A in one week.

By compressing the fundraising process into an intense sprint of 100 pitches in 10 days, the founder manufactured urgency and FOMO. This strategy resulted in multiple term sheets and even unsolicited investment offers from VCs who heard about the "hot" round.

The AI fundraising environment is fueled by investors' personal use of the products. Unlike B2B SaaS where VCs rely on customer interviews, they directly experience the value of tools like Perplexity. This firsthand intuition creates strong conviction, contributing to a highly competitive investment landscape.

AI companies raise subsequent rounds so quickly that little is de-risked between seed and Series B, yet valuations skyrocket. This dynamic forces large funds, which traditionally wait for traction, to compete at the earliest inception stage to secure a stake before prices become untenable for the risk involved.

Founders mistakenly pitch a logical case for their startup's viability. The winning pitch isn't about practicality; it's about presenting a massive, almost crazy vision that aligns with a VC's real motivation: the fear of missing out (FOMO) on the next massive company.