Via time.com
AI startups now absorb 81% of global venture capital, squeezing out smaller funds and forcing crypto VCs to rethink their entire playbook
Venture capital used to be a game where a scrappy fund with a good thesis could punch above its weight. That era is looking increasingly quaint. AI startups have become such a gravitational force in the funding universe that smaller VC firms, including those focused on crypto, are finding themselves starved of both capital and attention.
In the first quarter of 2026, global VC deployment hit a record $297 billion. AI startups captured 81% of that total, roughly $242 billion. To put that in perspective, AI’s share of global venture funding sat at 30% as recently as 2022. It climbed to 61%, or about $258.7 billion, across all of 2025.
The mega-deal machine #
Mega-rounds exceeding $100 million accounted for approximately 73% of total AI deal value in 2025. Fewer than 3% of all deals generated the majority of invested capital.
When a handful of companies vacuum up most of the oxygen in the room, the remaining startups, whether they’re building in crypto, fintech, biotech, or anything else, are left competing for roughly 19% of the global VC pie.
OpenAI alone raised $122 billion in a single funding round during Q1 2026. That one deal represented more than 40% of the entire quarter’s global venture deployment. Anthropic and xAI have also been significant beneficiaries of this capital concentration, though neither matched OpenAI’s staggering haul.
What this means for crypto-focused VCs #
The squeeze is hitting crypto-native venture funds particularly hard. Several crypto-focused VCs have reported a noticeable drain of both talent and limited partner interest toward AI-focused strategies. The LPs writing the checks, pension funds, endowments, family offices, are increasingly asking why they should back a crypto fund when AI funds are posting eye-popping deployment numbers.
AI has captured the institutional imagination in a way that crypto did during the 2021 bull run. The difference is that AI’s narrative has corporate revenue to back it up, with spending on AI applications skyrocketing from $11.5 billion in 2024 to $37 billion in 2025.
Some crypto VCs are adapting by broadening their investment mandates to include AI-adjacent opportunities. Projects sitting at the intersection of AI and blockchain, think decentralized compute networks, AI agent infrastructure, and data marketplaces, offer a bridge between the two worlds.
The structural shift underneath the numbers #
In 2025, AI represented 61% of total VC funding. In Q1 2026, it jumped to 81%. PitchBook and OECD data indicate that the bifurcation in venture capital is more than just a temporary state — it is a structural change.
Smaller funds face a compounding disadvantage. They can’t write the $100 million-plus checks needed to participate in the mega-rounds driving most of the value. The non-AI segments of venture capital are now competing for a shrinking pool of capital under tighter terms and with extended fundraising timelines.
The risk is that if AI continues to dominate VC allocation at 70-80% levels, the crypto venture ecosystem may need to find alternative funding mechanisms, whether through token sales, protocol treasuries, or community-driven funding models, rather than relying on traditional VC pipelines that have effectively redirected their firehose elsewhere.
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