AI startups accounted for 41% of the $128 billion in venture dollars raised last year, with companies like Anthropic, OpenAI, and xAI securing double-digit billion rounds.

In January, xAI raised a record-breaking $20 billion Series E round. Just months later, OpenAI secured an unprecedented $110 billion valuation, bringing it closer to a trillion-dollar worth. Anthropic followed with a $30 billion Series G round at a $380 billion valuation.

These large fundraising rounds reflect the high costs of running AI models rather than rapid growth in headcount. The latest data shows that funds raised after 2022 have posted higher internal rates of return (IRR), suggesting positive outcomes for backers.

However, Peter Walker from Carta cautions that younger funds might appear to perform well due to the paper gains from seed rounds followed by Series A valuations. The real test will be whether these investments translate into successful exits through IPOs or acquisitions in the future.

The venture market has become K-shaped, with capital concentrated among a few select firms backing fewer companies, while other startups face tougher fundraising environments.