Three AI companies are valued at over $5 trillion, exceeding the combined first-day valuations of tech IPOs over the past 45 years, indicating that the "diversified investment" logic of venture capitalists is failing.

The AI wave is pushing the venture capital industry’s long-standing “cast a wide net” logic to its limits.

Anthropic is expected to be valued at $2 trillion upon its upcoming IPO, the same valuation as SpaceX on its first day of trading in June. OpenAI is considering a private placement at a valuation of $1.2 trillion and a potential IPO next year. The combined valuation of these three companies alone would easily surpass $5 trillion.

According to data compiled by Jay Ritter, Professor Emeritus at the Warrington School of Business at the University of Florida, 3,365 technology companies completed IPOs between 1980 and 2025, with a combined market capitalization of $4.1 trillion on their first day of trading. The valuations of just three AI companies have already surpassed the total value of all technology IPOs in those 45 years.

This extremely concentrated wealth effect is profoundly reshaping the flow of funds and the competitive landscape of the VC industry.

In the first half of this year, Andreessen Horowitz, Founders Fund, and Thrive Capital alone raised approximately $25 billion, accounting for nearly one-third of all new venture capital funding in the US during the same period. For most smaller VCs, missing out on these key investments means being completely cut off from epoch-making returns.

At the same time, the entire VC industry is mired in a liquidity crisis. Since 2021, the scale of new fundraising has continued to shrink, with a large amount of capital locked in overvalued "unicorn" assets, narrow exit channels, and increasingly significant structural differentiation in the industry ecosystem.

The unicorn bubble remains unresolved, and venture capital firms are struggling to digest it.

The sky-high valuations of AI giants emerged against the backdrop of overall "indigestion" in the VC industry.

After the Federal Reserve began raising interest rates in November 2021, a large number of unicorn companies that relied on a low-interest-rate environment to support their high-growth valuations fell into difficulties.

The stock market’s interest in high-growth technology stocks other than AI has plummeted, forcing most unicorns to be reluctant to go public at lower valuations.

According to PitchBook data, based on the latest funding valuations, the total valuation of unlisted unicorn companies worldwide has reached a staggering $5.3 trillion. The IPOs of Anthropic and OpenAI will partially absorb this massive valuation backlog, but whether the remaining assets can truly translate into returns for investors remains to be seen.

Jay Ritter points out that VC funds lack transparency in their valuation methods for the assets they hold, giving them considerable room to maneuver. Investments that underperform can maintain their historical book value, while those that perform well are valued at market value, resulting in a systematic overvaluation of overall returns.

The siphon effect of leading institutions is intensifying, and the Matthew effect is becoming apparent in the industry.

Funds are rapidly concentrating in the hands of a few leading institutions.

In the first half of this year, Andreessen Horowitz, Founders Fund, and Thrive Capital raised a total of approximately $25 billion, accounting for nearly one-third of the total new funds raised in the US VC market during the same period.

These institutions generally adopt a strategy that combines early-stage and growth-stage funds, leveraging their scale advantage and brand effect to continuously attract institutional investors.

When the returns from AI giants' IPOs are finally tallied, the narrowness of the winners' circle is expected to further increase the pressure on external capital to compete for entry into these top funds.

For most small and medium-sized VCs, lacking both the capital to participate in ultra-large-scale financing rounds and the difficulty in effectively hedging through diversification strategies, their survival logic is being fundamentally challenged.

AI is impacting private equity, prompting VCs to reposition themselves.

The AI boom has also provided VCs with a narrative window to launch an offensive against private equity (PE).

Jen Kha, managing partner at Andreessen Horowitz, recently wrote that while private equity has historically accounted for a larger share of investment allocations, the super returns generated by AI companies "are fundamentally changing the algorithm."

She also warned that the disruption that AI will bring to the enterprise software industry could put enormous pressure on private equity firms, with some firms that rely on cash flow stability for their "software company mergers and acquisitions" strategy already experiencing significant losses.

However, this narrative has not yet been corroborated by data. Despite the continued surge in AI investment, new funds flowing into VC funds have generally contracted since 2021.

A significant amount of capital is trapped in existing investment portfolios and unable to circulate, and investors have not generally increased their overall allocation to VC. Whether VCs can leverage the AI supercycle to reposition themselves within the industry remains to be seen.

Whether the AI dividend can spread will determine the long-term trend of the VC model.

Whether the current extreme concentration will permanently change the operating logic of venture capital remains a point of contention.

Some argue that the early benefits of AI were highly concentrated in chip manufacturers, basic model developers, and cloud platforms, exhibiting certain phase-specific characteristics.

As the broader technological ecosystem surrounding AI infrastructure matures, numerous startups focused on specific application scenarios will have opportunities, and the wealth effect brought by AI is expected to spread to a wider range of investment areas.

If this diffusion effect comes true, the traditional VC logic of "broad deployment, covering the majority of failures with a few winners" may be partially corrected.

However, if AI value creation continues to be concentrated in a very small number of platform companies, then "betting correctly" will completely replace "diversified investment" and become the only effective survival rule in the VC industry.

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