Why Great Tech Startups Keep Failing: The Distribution Dilemma in the AI Era

Startups with brilliant products are crashing because they're ignoring the most critical ingredient: distribution.

Paul Irving, partner at GTMfund, argues that distribution is now the "final moat in the AI era." Traditional go-to-market strategies, he says, "won’t cut it in the crowded, AI-driven startup era of 2025." Instead of relying on paid ads, GTMfund prioritizes startups that build creative distribution channels—like targeting niche Facebook groups with 700 ideal customers.

Irving explains the network-building philosophy: "If you come and you’re curious, you teach them something as part of that as well. People are usually willing to open up doors." This approach contrasts sharply with legacy SaaS models, which often focused on broad, scalable marketing rather than hyper-specific community engagement.

In the AI era, innovation cycles have compressed from years to months. Founders must now "hone their data-driven approach" using AI tools to refine distribution tactics in real time. This shift demands a balance between algorithmic precision and human connection—something many traditional scaling frameworks lack.