After two years of relatively muted investment activity, it seems that VCs are starting to pour capital into startups at pandemic-era levels once again. But a closer look shows that they aren’t really.

In the fourth quarter of last year, investors funneled $74.6 billion into US startups, a substantial increase from the average of $42 billion invested in each of the previous nine quarters, according to PitchBook data released on Tuesday.

While these funding levels were previously seen only during the peak of the ZIRP era (end of 2020 through 2021), the reality is that this recent increase in venture capital funding is disproportionately benefiting a select few companies. In fact, $32 billion, or 43.2% of Q4 investment activity, was invested in precisely a handful of colossal-sized deals:

Databricks: In December, the data analytics company raised $10 billion at a $62 billion valuation.

OpenAI: The ChatGPT maker secured $6.6 billion at a $157 billion valuation in early October.

 xAI: Elon Musk’s xAI that’s developing a generative AI foundational model called Grok, which landed $6 billion from investors in December.   

Waymo: Self-driving car developer that operates robotaxi services in San Francisco, Los Angeles and Phoenix secured a $5.6 billion Series C in November led by parent company Alphabet and joined by a who’s who of Silicon Valley venture firms.

Anthropic: In November, the generative AI model developer raised $4 billion from Amazon.

Without these megadeals, Q4 investment activity would have mirrored the previous two years’ average of $42 billion. This stark concentration of venture capital investment highlights the widening gap between a few well-funded companies and the broader startup ecosystem.

Whether 2025 will see a continuation of the high venture capital investment levels observed in Q4 of last year remains to be seen. However, most venture capital funding will probably continue to flow towards a small cohort of the most promising AI companies.