U.S. AI Startups Face Scrutiny Over Annualized Revenue Claims

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* Editor's note: AI PRISM (Personalized Report & Insight Summarizing Media) is an artificial intelligence-based personalized news recommendation and summary service developed with support from the Korea Press Foundation. It selects and provides six news items tailored to each reader type.

■ Dispute over AI revenue calculations: Concerns about inflated revenue have surfaced as artificial intelligence startups in Silicon Valley widely convert a single month's results into an annual figure to demonstrate growth. Even OpenAI and Anthropic apply different standards, putting the credibility of valuations to the test as these companies head toward initial public offerings.

■ Cracks in the electric vehicle story: Polestar, once seen as a promising premium electric vehicle contender, has lost most of the corporate value it held at listing as weak sales and regulatory barriers piled up. With the company continuing to rely on cash infusions from its major shareholder, observers abroad have raised the possibility that it may not survive as an independent brand and could be folded into Volvo's or Geely's product lineups.

■ Wider exit routes for venture capital: The government and the financial investment industry are working to build a virtuous cycle of investment, exit and reinvestment, led by business development companies (BDCs) and secondary funds. Expectations are growing that early-stage investors such as venture capital firms will gain more ways to unload stakes beyond initial public offerings.

[News of Interest to Startup Founders]

1. Turning a Single Strong Month Into Annual Revenue: U.S. AI Startups Face "Inflation" Dispute

- Key summary: The annualized method of calculating revenue adopted by Silicon Valley artificial intelligence startups is drawing scrutiny ahead of initial public offerings. AI startups mainly use annual recurring revenue (ARR) based on subscription contracts, but usage-based pricing charged according to consumption, such as tokens or hours used, is difficult to count as recurring revenue. As a result, more companies are applying a run-rate method that projects one month's results over a full year, and some face questions over whether they are inflating results based on a one-off strong month. Meanwhile, OpenAI counts as revenue only the amount remaining after partners' shares, while Anthropic books the full amount customers pay through cloud platforms, prompting criticism that the two companies' revenue figures cannot be compared side by side.

2. Overlooked Design and Regulatory Barriers: Polestar Loses 95% of Market Value

- Key summary: The market capitalization of Polestar, an electric vehicle maker affiliated with China's Geely, has evaporated by more than 95% in the roughly four years since its listing. Its market capitalization, which stood at $27 billion when it listed through a special purpose acquisition company (SPAC) in June 2022, has shrunk to $1.3 billion, and its share price has fallen more than 60% this year alone. Sales last year came to 60,000 vehicles, one-fifth of the 290,000-vehicle target presented at the time of listing. The company is on track to be pushed out of the United States, its key market, after the U.S. government moved to bar connected cars from Chinese and Russian companies from being sold in the country as a general rule starting next year, including vehicles produced in the United States. Polestar is pinning its hopes on Europe, which accounts for about 80% of total revenue, but its free cash flow (FCF) recorded a net outflow of $1.061 billion in the first half of this year, and it has been assessed as facing material uncertainty over its ability to continue as a going concern.

3. BDCs and Secondary Funds in the Works: Will Exit Routes Widen?

- Key summary: The government and the financial investment industry are pushing to revitalize the market for venture capital exits using business development companies (BDCs) and secondary funds. The Ministry of Finance and Economy's 2026 tax reform plan includes a special provision applying separate taxation of 9.9% of dividend income, including local taxes, to investors who pay into BDCs through dedicated accounts. A BDC is a closed-end public fund required to invest at least 60% of its total assets in unlisted venture and innovative companies as well as small and mid-sized companies listed on KONEX and KOSDAQ, a process that widens opportunities for early-stage investors such as venture capital firms to sell stakes outside of initial public offerings. The government is also reviewing the introduction of continuation funds within the Fund of Funds, while the Korea Financial Investment Association is pursuing 1 trillion won in secondary investments, or trades of existing shares, over three years.

[Reference News for Startup Founders]

4. Hollywood Heavyweight to Make Films With AI

- Key summary: Jeffrey Katzenberg, the DreamWorks founder behind the animated films "Shrek" and "Kung Fu Panda," is moving to set up a video-generating artificial intelligence startup aimed at professional filmmakers. Katzenberg is launching the venture through WndrCo, the technology investment firm he leads, together with Bill Peebles, who oversaw OpenAI's video-generating AI Sora, and Sujay Jaswa, the former chief financial officer of Dropbox. Although the company is so new that even its name has not been disclosed, it is reportedly in discussions on large-scale fundraising with potential investors including the major venture capital firm Andreessen Horowitz. The move signals a shift in mood, coming from within a Hollywood that has pushed back against AI over copyright infringement and harm to creativity, though the enormous investment costs and computing resources required remain challenges.

5. Cameras That Catch Chip Defects: Targeting Double the Revenue by 2030

- Key summary: Vieworks (100120), based in Anyang, Gyeonggi Province, is shifting the center of gravity of its business toward semiconductors on the strength of imaging solutions for chip inspection. Founded in 1999, Vieworks started out in medical imaging components and expanded into display-focused machine vision. Its TDI line-scan cameras are used to inspect fine semiconductor circuits in front-end processes, while its area-scan cameras, which shoot at 24,500 pixels, are used for back-end packaging inspection, and orders have risen in step with expanded investment in AI chips and advanced packaging. Revenue from industrial cameras on a consolidated basis came to 31.5 billion won in 2023, 37.2 billion won in 2024 and 38.3 billion won last year. Kwon Hyuk-hoon, head of the machine vision division, said the division's revenue this year is expected to exceed a record 55 billion won and set a goal of doubling that by 2030.

6. Online Lending Industry on Edge Over Toss Entry: "Standards Needed for Large Players"

- Key summary: Six online investment-linked finance companies — Moneymove, Mowda, Honest Fund, 8percent, PFCT and Hanpass Financial — issued a joint statement calling for standards on the market entry of large financial platforms. Wariness among existing operators has grown after Toss signaled its intent to enter the online lending business and the four major financial holding groups were reported to be reviewing entry as well. The companies said conflicts of interest could arise if loan comparison and brokerage platforms directly run online lending operations or supply loan products through affiliates, and they called for disclosure of the criteria used to recommend and display products, along with the application of identical transaction terms to affiliates and non-affiliates. The industry said it would push for principles governing large financial firms' market entry and an institutional framework through discussions with financial authorities and experts.

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