OpenAI spent three days in April 2025 rolling back a GPT-4o update that, by the company’s own expanded postmortem, validated doubts, fueled anger and urged impulsive actions. This problem is called sycophancy: the tendency of large language models to prioritize user approval over accuracy, agreeing with whatever the user says, flattering their ideas, validating their beliefs, and abandoning correct answers when challenged. Sixteen months later, sycophancy is a funded market category. Stanford-led researchers found that 11 production models affirm users’ actions 49% more often than human respondents across more than 11,000 scenarios, and the companies selling tools to detect that behavior are closing the largest rounds in AI safety.

AI evaluation startups captured 35.26% of AI safety funding from 11.11% of deals in the twelve months to July 2026, a 3.17x capital-to-deal ratio. Braintrust raised an $80 million Series B led by Iconiq in February 2026 at an $800 million valuation for observability software that monitors production models for hallucination, drift and regression. Interpretability startup Goodfire reached a $1.25 billion valuation on a $150 million Series B, a bet that reading and editing model internals becomes a standalone market rather than a frontier-lab research discipline. Patronus AI carries an estimated $475 million........

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