Venture capital investment in U.S. startups surged to $74.6 billion in the fourth quarter of 2024, a significant rise from the $42 billion average of the preceding nine quarters, according to PitchBook data. However, this increase in funding is not as broad-based as it appears, as a large portion of the capital is concentrated in a few major deals.
In fact, $32 billion—about 43.2%—was invested in just five large-scale deals. These include Databricks, which raised $10 billion at a $62 billion valuation; OpenAI, which secured $6.6 billion at a $157 billion valuation; xAI, Elon Musk’s generative AI company, which raised $6 billion; Waymo, the self-driving car firm, which secured $5.6 billion; and Anthropic, the AI model developer, which raised $4 billion from Amazon.
Excluding these mega-deals, venture capital activity in Q4 would have reflected the same levels seen during the past two years. This trend illustrates the growing divide between well-funded companies, primarily in AI, and the broader startup landscape.
While venture capital funding in Q4 2024 mirrored the high levels seen during the pandemic, the concentration of investment suggests that funding is largely concentrated on a select few startups, with the majority of capital flowing into the most promising AI companies. It remains uncertain whether this trend will persist in 2025, but AI companies are expected to continue receiving the lion’s share of venture capital.