A new report from HumanX and Crunchbase indicates that VC investments in AI surpassed $103 billion in 2024, taking investment volumes back to the 2021 peak. AI has been driving unprecedented capital flows into the startup ecosystem for several quarters now, however, the difference now is a real concentration trend, with the majority of funds flowing to a small elite of high-profile tech companies.
In Q4 2024, half of all venture capital investment dollars went to AI companies. On the fund size, 75% of those rounds were mega-rounds of $100 million or more, highlighting the scale of capital being deployed.
Record Investment Levels Return
According to recent PitchBook data, US startups have already secured over $30 billion this quarter alone (Q1 2025), with an additional $50 billion in fundraising currently in progress including OpenAI’s bid to raise $40B from SoftBank at a $260-$300 billion valuation and Cursor in talks to raise money at $10 billion valuation. Six large deals accounted for 40% of total US AI funding, including those of OpenAI, xAI, SSI, Anduril and Databricks.
Recent weeks have seen a flurry of massive funding rounds:
- Stripe secured funding at a $91.5 billion valuation
- Anthropic raised capital at a $61.5 billion valuation
- Ramp closed a round at $13 billion
- Shield AI secured investment at $5.3 billion
The FT’s chart shows how current AI investment frenzy is taking the venture industry close to the 2021’s roaring venture levels, when a staggering $358 billion flooded into tech companies.
At the same time, Venture Capital has a liquidity problem
It’s no secret that the lack of liquidity has created a ton of pressure on the venture capital asset class. Some are calling it the Venture Capital Apocalypse (but let’s not get carried away). LPs, the backers of VC funds, want to see their previous investments returned, which requires two types of exits: IPOs and large M&A deals. The IPO window has been closed for some time, and with the current volatility in the market (case in point: this week $1 trillion was erased from the market), it’s not likely to change overnight. The regulatory scrutiny on M&A under Biden’s administration, is likely to ease under Trump and we’re starting to see the first large deals come through.
As a result, funding going into venture capital funds is down year over year. According to the latest 2025 Bain Private Equity report, private fundraising declined for a third straight year across stages.
As previously mentioned on VC Cafe, in 2024, 75% of all the capital invested into venture capital funds ($51 billion) went to 30 funds, many of them multi billion dollar funds.
If the pressure on exits is not enough, there are currently over 1,446 active unicorns globally, with $868.4B in funding and a combined valuation of $4.6T. It’s unlikely that the majority will go public or get acquired and many would struggle to justify their previous pricing in today’s market. In 2024, 1 in every 5 rounds was a ‘down’ round and that trend is likely to continue for these companies to survive.
This point is just to say that the high valuations in AI and the concentration of capital, is in contrast to what’s happening in the macro of venture capital. On the one hand, AI companies, especially LLMs and foundation model are pioneering a new technology wave, on the other hand, liquidity is not available in the near future which means that these companies will continue to need access to large amounts of private capital to continue to operate (hence OpenAI’s $40 billion round being discussed with Softbank, or project ‘Stargate’ which positions AI leadership as a top national priority.
The Bottom Line: A Two-Tiered Venture World?
This paints a picture of a venture market operating on two distinct tiers. At the top, AI is experiencing a renaissance, attracting unprecedented capital and pushing valuations sky-high, reminiscent of the 2021 boom. Beneath the surface, however, the broader venture ecosystem is wrestling with the realities of limited liquidity and valuation compression. The critical question becomes: can the AI engine pull the entire venture wagon out of the liquidity ditch? Or are we headed towards a new, highly concentrated venture landscape where the AI elite thrives, while the rest navigate a much tougher terrain?
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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