Evan Conrad: Most AI startups won’t be able to secure compute power

On October 22, Evan Conrad published an article titled “The End of Startups,” with the subtitle “The Coming Credit Crunch.” The piece states that within the next six months, most AI startups will be unable to procure compute—global available capacity has already been fully sold out. To access newly built capacity, companies must sign contracts with newly constructed compute clusters, which are increasingly favoring investment-grade entities. Conrad emphasizes that startups generally lack investment-grade status and are therefore facing steadily rising prepayment requirements—even cases requiring 100% of the contract value to be paid upfront, which he has personally witnessed. This trend stems from lenders’ and cloud providers’ prudent strategy to actively avoid taking on new credit risk. He further analyzes that investment-grade tenants are already scarce, and some existing investment-grade entities have seen their ratings downgraded due to leveraged positions and reselling compute to non-investment-grade token buyers—creating what he terms a “credit bottleneck.”