AI startups accounted for 41% of the $128 billion in venture capital raised last year, a record high. Anthropic, OpenAI, and xAI dominated the scene, raising $30 billion, $110 billion, and $20 billion respectively. These three alone captured half of the funding, with xAI's $20 billion Series E and OpenAI's $110 billion round pushing valuations toward a $1 trillion target.

The venture market has become K-shaped, where capital concentrates in a few firms backing top-tier startups. Peter Walker, head of insights at Carta, noted, "Fewer bets, but more capital. AI startups raise bigger rounds not because of employees but due to high model costs." IRR for newer funds is strong, partly because they back AI-native companies. However, early returns may be inflated by seed investments that later attract higher valuations.

While the report views rising IRR as a positive sign, experts caution that this momentum depends on future exits. Investors hope for blockbuster IPOs or acquisitions to spread returns broadly. Yet, the question remains: Is this a sustainable trend or a bubble fueled by hype?

The data underscores AI's transformative role in venture capital, but long-term success hinges on whether startups can deliver tangible returns beyond current valuations.