The data is now available. Last year, AI startups accounted for a record-high annual share of venture capital, representing 41% of the $128 billion raised by companies on Carta. In a way, this was expected. Investors were voracious in deploying capital to AI companies, with a striking concentration: just 10% of startups accounted for half of all funding.
Leading this charge were giants like Anthropic, OpenAI, and xAI, which raised double-digit billions at sky-high valuations. Their fundraising velocity remains astounding. In January, xAI raised a $20 billion Series E. In February, OpenAI secured one of the largest private funding rounds ever at $110 billion, bringing the company closer than ever to a $1 trillion valuation. Between them, Anthropic raised a $30 billion Series G last month at a $380 billion valuation.
Together, OpenAI and Anthropic represented a heavy portion of the $189 billion in global venture capital raised last month. All three companies have teased potential IPOs for later this year, creating intense excitement among investors.
The venture market is now distinctly K-shaped, or bifurcated. Capital remains highly concentrated in a select few firms that back a handful of companies, while the rest of the market struggles for attention. Peter Walker, head of insights at Carta, notes that while funding rounds have gotten slightly harder to raise, the capital per round has increased. This means fewer bets, but more capital. AI startups are raising these enormous rounds not due to large headcounts, but because the operational cost of running AI models is exceptionally high.
The latest Carta data reveals another telling trend. Funds raised in 2023 and 2024, following the launch of ChatGPT, have posted the highest internal rates of return (IRR). This contrasts with the declining IRR of funds raised between 2017 and 2020. This strong start for younger funds is seen as a positive indicator for those backing leading AI startups.
Walker points out that newer funds may appear strong on paper because an early investment in a seed round, followed by a higher-valued Series A, creates the impression of high returns in a short period. This pushes IRR up. It is also likely that the portfolios of recent funds are filled with AI-native startups in a way that older fund portfolios are not.
The critical question remains whether this early enthusiasm will translate into real returns for investors through major exits like IPOs or acquisitions, which could then spread capital more widely to younger startups. Alternatively, we may simply be in the hype phase of a bubble that will eventually pop. Only time will tell.