Artificial Intelligence, with its promise of revolutionizing all fronts of the economy, has left an indelible mark on the dynamics of venture capital in the United States. However, although enthusiasm continues to drive venture capital investment to new heights, the gap between large deals – driven by megafunds – and smaller ones is widening, according to a report by Silicon Valley Bank (SVB).
“AI is still the engine of venture capital investment in the U.S., representing 58 cents of every dollar deployed in 2025,” the specialized firm stated in its “State of the Market” report, where it outlined its outlook for the second half of 2025.
In this regard, for professionals at the innovation-focused bank, the word of the moment for the VC fund segment is “bifurcation.”
“Capital raising in the U.S. is on track to reach 56 billion dollars this year, a 21% drop compared to 2024 and the lowest level since 2017. Even so, large funds continue to grow, stretching the very definition of venture investment as we know it,” SVB noted.
In this context, the bank highlighted that unprecedented financings – such as the 40-billion-dollar deal led by OpenAI – are pushing total VC investment amounts to higher levels, but this only benefits the largest businesses. “We see that investment numbers remain stubbornly low for deals under 100 million dollars,” the report stated.
Contrasting Dynamics
Figures compiled by SVB show that, over the last three years, more than 36% of funds raised from VC vehicles have gone to funds of at least 1 billion dollars. In contrast, the proportion was 22% in the 2016–2019 period.
Although megadeals by AI companies are taking total venture capital investment “to the stratosphere,” SVB warned that “you cannot measure the venture economy by the amount of VC being deployed.”
Currently, they point out, nearly two-thirds of VC dollars in the U.S. are allocated to deals over 500 million dollars. In contrast, at the peak of the venture capital boom in 2021, that proportion was only 18%.
On the other hand, SVB emphasized, looking at deals under 100 million dollars, VC levels are on par with the pre-pandemic period. A similar trend is seen in the number of deals, falling from its peak of 1,650 to the 1,150 recorded in this edition of the report.
This shifting dynamic has also affected how megafunds operate. Managers of large strategies – such as Andreessen Horowitz, General Catalyst, and Coatue – are “changing the rules (and the math) of venture capital investing.” Funds are becoming larger and are structured in dynamic ways.
“What is driving these mega-investments? Megafunds, of course,” the report’s authors underlined, adding that the six largest vehicles raising capital since 2021 have participated in deals equivalent to one-third of the VC raised in the last 12 months. This contrasts with the 10% seen at the end of 2024. “The increase is driven almost exclusively by massive AI deals,” they noted.
Funding Rounds
Another phenomenon observed in the fundraising process within the venture capital space is that startups are taking more time to “graduate” from one funding round to the next — at the slowest pace in history, according to SVB’s figures.
“The number of startups graduating to the next series in the past three years has dropped by half compared to 2020, and we don’t believe this will change soon,” the firm stated.
Faced with this particular financing scenario, companies are moving to cover that gap by cutting expenses and focusing on profitability on the one hand, or launching extension or bridge rounds between series on the other.
“With the current median time between rounds, it would take a company ten years to go from seed capital to Series D,” they indicated, which is 45% longer than in 2022. “If this trend continues, it will perpetuate the mass of companies that remain private for longer,” they added.
Another effect, they noted, is that the trend is pushing a variety of early-stage investors to sell their positions in later rounds, so they can return capital to LPs sooner.
