1Mby1M Virtual Accelerator AI Investor Forum: Investor Gus Tai on VC Industry Size (Part 2)

Sramana Mitra: One interesting point is that the peak occurs in 2021, which was the height of COVID. This was not a traditional boom time, yet the venture industry peaked in 2021 and 2022, during the pandemic.

Gus Tai: I would also like to comment on the next slide, and then we can move into the broader discussion. This chart complements the prior one and also comes from PitchBook. It shows the amount of capital being raised by venture firms, which peaked in 2022.

The previous slide focused on the number of active venture firms making investments. This slide focuses on venture firms raising money. The peak occurred in 2022, followed by a sharp decline in 2023, 2024, and 2025. Note that 2025 represents only three quarters of the year.

In 2024, approximately $80 billion was raised, making it the most recent complete year. If you consider a typical Pareto distribution, where 80% of outcomes come from 20% of participants, venture capital in 2024 was even more concentrated. Seventy-five percent of the capital went to just 30 firms.

That means 75% of the dollars went to 4% of the funds raising capital. On the prior slide, we saw about 6,000 active venture firms. Yet only 30 firms captured the majority of the capital.

Venture capital today is fundamentally different from what it was ten years ago. Many of the themes Sramana is highlighting apply broadly across the industry. One major difference, however, is the institutionalization of very large venture firms with massive assets under management that also provide a wide range of services.

Sramana Mitra: Which changes the nature of venture capital.

Over the last few years, especially in 2023, we see a clear inflection point. This chart shows when the generative AI mania truly took hold. ChatGPT entered the market in 2022, but the investment frenzy accelerated in 2023.

At that point, mega-investments flowed into large LLM companies such as Anthropic, OpenAI, and Thinking Machines Lab. Some of these companies had no products yet were valued at billions of dollars. This is when the hyperscaler phenomenon accelerated, and fundraising data reflects that behavior.

Gus Tai: What we are seeing is a barbell effect. On one end are mega rounds at extremely high valuations. These are predominantly funded by the top 30 to 50 venture firms with very large pools of capital.

This is a fundamentally different business than allocating half a million to a few million dollars to a bootstrap team or a small group of five people.

Sramana Mitra: Those top 30 funds are no longer playing that game. They are not investing in smaller companies that grow in a disciplined way. They are pursuing a different model of venture capital focused on capital-heavy startups that begin with enormous amounts of funding.

Only a small number of startups can raise capital at that scale, which allows a few companies to dominate that segment of the market.

Gus Tai: Exactly. Even in an environment of large funding rounds, it is harder to raise money if your company does not fit that model.

Part 1 | Part 2 | Part 3 | Part 4 | Part 5

One Million by One Million (1Mby1M) is the first global virtual accelerator in the world, founded in 2010 by Silicon Valley serial Entrepreneur Sramana Mitra. It offers a fully online entrepreneurship incubation, acceleration and education resource for solo entrepreneurs and bootstrapped founders working on tech and tech-enabled services ventures. 1Mby1M does not charge equity, offers an AI Mentor available 24/7 in 57 languages, and offers a compelling alternative to Y Combinator and other equity accelerators.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator AI Investor Forum: Investor Gus Tai on VC Industry Size
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