The funding round that caught my attention the most over the past two weeks was Sentient. This AI-crypto startup raised an impressive $85 million in what is arguably the largest seed funding round in the crypto space this year. The round was co-led by three big-name investors: Peter Thiel’s Founders Fund, Pantera Capital, and Framework Ventures, with additional big-name backers.
As I reported at the time, Sentient raised a huge amount of money in just three months, despite being in the very early stages of platform development. Details of the platform’s features are still kept under wraps. So what is it about Sentient that has investors betting so much?
I interviewed Sentient’s three co-lead investors and three participating investors. Each of them was most impressed by Sentient’s four co-founders or core contributors. polygon Matic
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‘Sentient, an AI venture development startup founded by Sandeep Nailwal, renowned engineering professors Pramod Viswanath and Himanshu Tyagi, and Kenzi Wang of Symbolic Capital. The background and capabilities of the team played a big role in the investors’ decision to back Sentient.
“The most important thing about Sentient is the quality of the team,” Joey Krug, a partner at Founders Fund, told me. “I’ve known Sandeep and Pramod for years,” he said, adding that they are both really good at their craft.
Jack Platts, founder of Hypersphere Ventures, has known Nailwal and Wang for years and said he “particularly enjoys investing in guys who have a history of success.” Kelly Callaghan, a partner at Arrington Capital, said, “The most impressive thing about Sentient is the team behind it.”
Beyond the team, Sentient’s investors are also impressed by the vision. The startup aims to develop an open-source artificial general intelligence (AGI) platform built by the community. AGI is a type of AI designed to perform any intellectual task that a human can perform and potentially surpass human capabilities in many areas. Creating AGI is a major goal of big AI giants like OpenAI, Google DeepMind, and Amazon-backed Anthropic. Current AI models like ChatGPT excel at specific tasks, but they do not have general intelligence capabilities similar to human cognition.
Sentient aims to compete directly with organizations like OpenAI, but takes a different approach: building an open-source, monetizable AGI through community contributions. Sentient aims to help developers build AI models, monetize their models and data, and collaborate to become key stakeholders in the open AGI economy. This is a difficult task, especially for young startups competing with large tech giants.
“What Sentient is trying to do is quite difficult,” Krug admits. “When I wrote the first check, it wasn’t clear if it was actually possible,” Krug says. But I think Sentient has made significant progress and is showing early signs that the platform is technically viable.
Krug described Sentient’s vision with the following analogy: Ethereum 
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It’s open source, but users have to pay to use it. He said Sentient users have to pay to get answers to their queries using AI models that are verified with signed, encrypted messages. He said the approach aims to solve the economic problem of open-source AI. Again, he acknowledged it’s not easy, but said Sentient has “a very good chance of solving it to some extent.”
If AI development remains closed source, many important aspects of society will be vulnerable to the centralizing effects of censorship and rent seeking, said Paul Veradittakit, managing partner at Pantera Capital. According to Veradittakit, Sentient’s Open, Monetizable, Loyal (OML) AI model has “huge potential to disrupt the AI development industry.”
Brandon Potts, a partner at Framework Ventures, said Sentient’s open, monetizable AI model “will be a huge boost to the open-source community,” because it “stands in stark contrast to the status quo of big tech incumbents, walled gardens, and data silos dictating the future of AI.” Potts called the Sentient team “the most capable team” working to solve the economics of open-source AI.
Sentient plans to launch a testnet by the end of the current quarter. Will it make its ambitious vision a reality or will it buckle under the pressure? It’s yet to be seen. For now, investors are being very bullish on the team’s ability to deliver on its promises.
Sentient’s Biggest Risks and Challenges
Pantera’s Veradittakit said Sentient’s biggest risk is its very well-funded competitors. Sentient’s $85 million seed round is significant, but it doesn’t compare to the billions of dollars being poured into closed-source companies like OpenAI and Anthropic, Veradittakit said.
Rakesh Gidwani, partner and chief technology officer at Protagonist, echoed those concerns. He said Sentient faces competition for top talent beyond capital. But he said he remains confident in Sentient’s leadership and its mission to continue to inspire top talent to join startups.
Framework’s Potts says Sentient’s biggest challenge is adoption: getting developers and users to move away from centralized, big tech companies to new, open, permissionless alternatives. But Potts says open source innovation is moving quickly and gaining traction among enterprises, developers, and users alike.
Hypersphere’s Platts also noted that successful crypto projects tend to focus only on crypto users. So for Sentient, going beyond the crypto community is the biggest risk, but also the biggest opportunity, he said.
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