Will AI funding concentrate into a few companies or spread across many new ones?

Jason Lemkin · Aug 23, 2023

VC dollars deployed into AI will double in 2024 versus 2023

Everyone is a thematic investor, the AI cycle has only just started, and large pools of capital need somewhere to go — it can't go into SaaS companies at $500k ARR, so it flows to where massive spend is; NVIDIA isn't going down, OpenAI isn't going bankrupt, and every top SaaS investor he knows is now an AI investor and not ready to go back to SaaS

Scope: measured in dollars, not number of deals; he concedes these may be terrible bets on the merits

49:15 20VC: NEW FORMAT: Mega Funds Will Come Back, Why Markups Have Corrupted VC, Why RIFs Should Always Be An Embarrassment To SaaS Founders and Why Pitching is BS and Fake with Jason Lemkin and Rick Zullo

Harry Stebbings · Aug 23, 2023

AI dollar deployment will increase 2x in 2024 but capital will consolidate into a handful of the largest players rather than being spread out

The money will flow to OpenAI, Anthropic and others with the largest runway

50:14 20VC: NEW FORMAT: Mega Funds Will Come Back, Why Markups Have Corrupted VC, Why RIFs Should Always Be An Embarrassment To SaaS Founders and Why Pitching is BS and Fake with Jason Lemkin and Rick Zullo

Harry Stebbings · Sep 27, 2023

More dollars will be deployed in AI next year than this year, with massive concentration of capital into fewer companies

The explosion of excitement meant everyone and their dog got a dollar, which will correct

62:40 20VC: "How Being a Founder Almost Killed Me"; We Have Lied to a Generation of Founders | The Hardest Truths About Being a Founder Revealed | Why AI Co-Pilot is BS, Seat Pricing is Over & User Interfaces are Stupid with Christian Lanng

Christian Lanng · Sep 27, 2023

More companies will still get funded despite capital concentrating at the top, and the startups being started now will crush it by avoiding early-generation mistakes

Some of the smartest people he knows spent a year or two watching the hype and are only now getting into it

Scope: concedes concentration at the top will happen

62:54 20VC: "How Being a Founder Almost Killed Me"; We Have Lied to a Generation of Founders | The Hardest Truths About Being a Founder Revealed | Why AI Co-Pilot is BS, Seat Pricing is Over & User Interfaces are Stupid with Christian Lanng

Byron Deeter · Aug 25, 2025

There is still substantial venture return available outside the mega top-10 AI deals: hundreds of compelling businesses will be created in and around those ecosystems, producing many 10x and 100x outcomes.

The headline funding-concentration statistics are skewed by a handful of LLM megarounds, but the surrounding ecosystem economy remains vibrant and healthy.

Scope: accepts the power law drives the premium outcomes; market is more skewed than ever before

11:37 20VC: Do Margins Matter in AI? | Is Defensibility Gone For Good? | Is Vertical SaaS Dead in a World of AI | What SaaS Rules Are BS and No Longer Apply in a World of AI | The Future of Venture: Why Chanel vs Walmart is BS with Byron Deeter

Rick Zullo · Aug 23, 2023

AI is not where capital should be deployed in 2024, and headline dollar growth will mostly reflect a few giant late-stage rounds rather than good deals

He is already hearing a lot of investor fatigue on AI, and single companies like OpenAI can absorb $2-3bn checks — the equivalent of an entire prior category's funding going into one company

Scope: distinguishes high-quality deals where money should go from where money will go

49:54 20VC: NEW FORMAT: Mega Funds Will Come Back, Why Markups Have Corrupted VC, Why RIFs Should Always Be An Embarrassment To SaaS Founders and Why Pitching is BS and Fake with Jason Lemkin and Rick Zullo

Harry Stebbings · Mar 19, 2025

Aggregate market pricing reports are useless for venture because they average a thousand Series Cs when the game is one of outliers, and for the outliers prices have gone way up as excess capital concentrates faster

Venture returns come from a handful of outliers, which are now more known and obvious, so surplus cash piles into them and drives $500M-$1BN Series C and D rounds

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