Funded: This VC Says There's Still Room for AI Startups | Nick Tippmann, TipTop VC

About TipTop VC

📍 Austin, Texas | 💰 Check Size: $100K–$400K | 🎯 Stage: Pre-Seed & Seed | 🏢 Focus: Vertical AI

TipTop VC backs early-stage vertical AI startups across industries like LegalTech, healthcare, construction, and financial services. Founded by Nick Tippmann, former CMO at Greenlight Guru, the firm is backed by an LP collective of operators who've built category-defining vertical SaaS companies. TipTop currently backs a portfolio of eight companies, working alongside founders on go-to-market, fundraising, and hiring, not just writing checks.

In This Episode

Nick Tippmann, founder of TipTop VC, joins Alex to break down exactly how he evaluates founders and markets at the earliest stages, and why he's building a fund around a very specific thesis.

✓ The three-part framework (IQ, EQ, and grit) he uses to size up founders
✓ The real math behind TipTop's deal funnel: 824 decks reviewed, 6 investments made
✓ Why vertical AI represents an order-of-magnitude bigger opportunity than vertical SaaS did
✓ Why he doesn't buy the fear that foundational AI labs will eventually swallow every startup
‍

🎧 Also available on: Apple Podcasts | Spotify

Key Takeaways

1. Founders Are Judged on IQ, EQ, and Grit, Not Just Execution

"When you're talking to founders, I'm often looking at their IQ, EQ, and grit." - Nick Tippmann

Nick's framework skips past the usual pedigree signals and goes straight to three traits: intelligence, emotional intelligence, and resilience. IQ gets you in the room, but it's EQ that determines whether someone can actually build and lead a team, since building a company is fundamentally a human endeavor, even in an AI-heavy world.

Grit is the trait he comes back to most. Building a company is hard in ways that don't show up in a pitch deck, and founders who can't push through the inevitable rough stretches don't make it to the other side, no matter how sharp they are.

2. TipTop's Real Deal Funnel, by the Numbers

"I had reviewed 824 decks last year, which turned into 210 first conversations with founders, which funneled into about 59 that we took into an actual diligence process, and then made six investments." - Nick Tippmann

Most VCs talk about their process in vague terms. Nick's numbers are specific: 824 decks reviewed last year alone, narrowing down to just six actual investments.

That funnel says something about how selective early-stage investing really is, and how much of the work happens well before a term sheet ever gets discussed.

3. Vertical AI Isn't Just Vertical SaaS With a New Coat of Paint

"That's the order of magnitude change that has VCs so excited right now." - Nick Tippmann

Nick walks through the shift from vertical SaaS 2.0 (software plus fintech) to vertical AI, where companies aren't just making work more efficient, they're doing the work itself. That distinction matters because it changes what's actually being sold, and how much of a customer's cost structure a startup can realistically capture.

Nick's own back-of-napkin estimate puts it in perspective. Total services and labor spend across the economy runs somewhere between $4.6 and $13 trillion, and his read is that AI-driven automation could convert 40 to 50% of that into software spend, an order-of-magnitude jump from where vertical SaaS 2.0 topped out.

4. Why Nick Isn't Worried About AI Labs Eating Every Startup

"The idea that the labs are going to eat everything and it's going to leave nothing, or no room for companies at the application layer, I would say is pretty much absolutely backwards." - Nick Tippmann

It's a live anxiety across the startup world right now: if foundational labs can build anything, what's left for anyone else to build on top of them? Nick's pushed back on that framing, drawing a parallel to an older fear that hyperscalers like Google would eventually crowd out every SaaS company. That didn't happen, and he doesn't think it'll happen this time either.

His argument comes down to specificity. Foundational labs aren't going to do the deep, customer-by-customer work that vertical AI companies live in, and that gap is exactly where the opportunity sits.

Reference Links‍

TipTop VC - Nick's fund, backing early-stage vertical AI startups across industries.

Greenlight Guru - Where Nick served as founding CMO before becoming an investor.