Venture Capitals’ Major investment is ineffective for struggling startups

Rise of Investments in the Fourth Quarter:

While startups are struggling, Venture capital has increased to $75B investment in the fourth quarter, not making it any easier for startups to raise money. However, according to current PitchBook data, the funding provided by venture capital to startups experienced a significant rise in the fourth quarter of last year that reached up to an investment of $74.6 billion. Unfortunately, after two years of low level investment in the market the current investment activity is at a pandemic level. Although, capital has been flowing in all sectors, startups are still struggling to secure funding due to uneven investment distribution.

Securing Major Deals:

The majority of the $75 billion investment is unequally benefiting few companies, as a matter of fact the 43.2% investment in the fourth quarter were made particularly to benefit some companies. Databricks worth increased to $62 billion after it secured an investment of $10 billion in December. OpenAI, the parent company of ChatGPT, gained $6.6 billion and attained worth of $157 billion in October. In December, Elon Musk’s generative AI project, Grok , received a $6 billion grant. Alphabet provided a heavy funding to Waymo, the company that provides self-driving cars. They secured $5.6 billion in November. At the same time, Amazon spent $4 billion developing generative AI models. The average investment level in the fourth quarter would have remained at $42 billion, which is equivalent to the previous nine quarters, if not for these major deals.

 Analysis upon Future Investments:

Startups as a whole still face challenges despite the billions in revenue generated by high-profile companies. This increasing gap highlights the bitter reality of venture capital, where only companies with AI minds dominate, and leaving smaller startups to compete for scarce resources. There’s a debate over whether venture capital in 2025 would be able to maintain such high level investments or not. Experts and analysts expect that a few AI-focused startups will continue to receive funding in disproportionate amounts, while others may face difficulties in looking for a finances.

Read More: Amazon Playing Bold Moves, Acquiring Indian Startup Axio For Over $150M

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Fatimah Misbah Hussain
Fatimah Misbah Hussainhttps://www.techi.com/
Fatimah Misbah Hussain is a tech writer at TECHi.com who transforms complex topics into accessible, compelling content for a global audience. She covers emerging trends, offers insightful updates, and explores technology’s evolving impact on society with clarity and depth.

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