Private Markets Booming As Mainstream Investors Get Left Behind

The Private Markets are Concentrating Faster Than Ever. What Happens to Everyone Else?

In the ever-evolving landscape of private markets, a phenomenon has emerged that is leaving many investors and startup founders wondering about the future of venture capital. According to recent data from Crunchbase, companies with breakout growth or experienced founders in compelling sectors are raising funding at an unprecedented rate, while the rest of the market is increasingly left behind.

A closer look at the numbers reveals that in 2025, a staggering 70% of U.S. funding — a total of over $200 billion — was invested in just 389 companies that raised rounds of $100 million and over. Of this amount, a whopping $90 billion went to a mere six companies that each secured more than $5 billion in funding last year.

In contrast, the remaining 30% of U.S. venture capital, totaling around $88 billion, was distributed among approximately 6,000 companies that raised rounds ranging from $1 million to less than $100 million. These numbers paint a clear picture of a market that is rapidly concentrating its investments in a select few, leaving many smaller startups struggling to gain traction.

The Concentration of Capital

One of the most striking aspects of this trend is the sheer scale of investment being concentrated in the largest companies. In 2021, when capital was still flowing into the private markets, 60% of all funding went towards companies that raised rounds of $100 million or more. However, by 2025, this percentage had dropped to just 40%, with an even greater proportion of capital now going to companies in the $500 million and over range.

This shift in focus is not surprising, given the enormous growth potential that these larger companies are offering. With the likes of OpenAI, Anthropic, and other agentic AI pioneers leading the charge, it’s little wonder that investors are flocking to these companies with their vast resources and promising prospects.

However, as Daniel Docter, managing director at Dell Technologies Capital, astutely observed during a recent virtual panel discussion, “While these companies are absolutely amazing, they’re going to have to go after incredibly large markets. There’s just so much white space around that, where really interesting founders and startups can play.”

Madison Faulkner, partner at NEA Ventures, concurred, noting that she’s increasingly excited about backing seed and Series A startups in spaces that compete with these giants. “I think they’ve really struggled to focus at this point in time, and they’ve been spending so much time trying to win lots of different use cases,” she said.

Nnamdi Okike, co-founder of 645 Ventures, shares a similar perspective, emphasizing the importance of startups building defensible positions in their chosen markets. “If you’re very deeply embedded into a company’s workflow, where you’re doing many different tasks, not to mention assembling a proprietary corpus of data that you can train your models on, we think that can be a sustainable moat over time.”

A Growing Venture Capital Market

While the concentration of capital in the largest companies is a pressing concern, it’s essential to recognize that the venture capital market as a whole is still growing and evolving. According to Crunchbase data, funding to startups across all sizes has increased modestly year-over-year, with the exception of rounds between $1 million and $10 million.

Even at the smaller end of the spectrum, however, funding and deal counts have remained relatively stable, with declines less than 10% compared to the previous year. This suggests that while the market may be becoming more concentrated, there is still room for smaller startups to flourish.

The Future of Venture Capital

As we look ahead to the future, it’s clear that the venture capital landscape will continue to shift and adapt in response to changing investor priorities and technological trends. While the rapid growth and capital concentration at the top of the market may raise concerns about the fate of smaller startups, there are also reasons to be optimistic.

The emergence of agentic AI pioneers like OpenAI and Anthropic is poised to expand the total addressable market for tech startups in ways that were previously unimaginable. By focusing on seed and Series A investments in spaces that compete with these giants, investors can identify promising startups that have the potential to build sustainable businesses and create new opportunities.

Ultimately, the future of venture capital will depend on the ability of entrepreneurs and investors to adapt to changing market conditions and capitalize on emerging trends. As Nnamdi Okike so aptly put it, “If you’re very deeply embedded into a company’s workflow, where you’re doing many different tasks, not to mention assembling a proprietary corpus of data that you can train your models on, we think that can be a sustainable moat over time.”

As the private markets continue to concentrate their investments in a select few, it’s essential for investors and startup founders alike to stay focused on building defensible positions and identifying opportunities in emerging spaces. By doing so, they can not only navigate the challenges of an increasingly crowded market but also unlock new potential for growth and innovation.

By recognizing the importance of adapting to changing market conditions and capitalizing on emerging trends, entrepreneurs and investors can position themselves for success in a rapidly evolving landscape. With the right strategy and focus, it’s possible to thrive in this environment and create sustainable businesses that drive growth and innovation.

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