AI Startups: Venture Capital Dominated by OpenAI and xAI

AI startups have taken a prominent place in the venture capital world, capturing 41% of the $128 billion raised by companies on the Carta platform last year. This figure marks a historic record, highlighting investors' insatiable appetite for this rapidly expanding sector. Indeed, only 10% of startups managed to capture half of this funding, illustrating a concentration of resources on a limited number of players.

Among these startups, Anthropic, OpenAI, and xAI stand out for their ability to attract colossal funding. Last year, they raised double-digit billions, and this trend shows no signs of slowing down. In January, xAI raised a $20 billion Series E funding round. OpenAI followed in February with a $110 billion round, one of the largest ever conducted, bringing the company closer to a valuation of $1 trillion.

Anthropic sits between OpenAI and xAI in terms of size, having raised a $30 billion Series G round last month, reaching a valuation of $380 billion. These companies have played a major role in the $189 billion of global venture capital raised recently. They have also announced planned IPOs for later this year, generating considerable interest among investors.

The venture capital market is now characterized by a "K" structure, where capital concentrates on a few companies that then support a limited number of firms. Peter Walker, head of insights at Carta, explained that while funding rounds have become more difficult to raise, the capital for each round has increased. AI startups are raising larger amounts not due to a large number of employees, but because of the high costs associated with operating AI models.

Recent data from Carta reveals that funds raised in 2023 and 2024, following the launch of ChatGPT at the end of 2022, show the highest internal rate of return (IRR). This phenomenon contrasts with the declining IRR of funds raised between 2017 and 2020. Walker emphasizes that younger funds appear promising on paper, as initial investments in seed funding rounds can quickly yield high returns if companies subsequently raise series at higher valuations.

The future will tell whether this early enthusiasm translates into tangible returns for investors through spectacular IPOs or major acquisitions, or if we are simply witnessing a hype phase that may precede a bubble.