AI startups command record venture capital as seed valuations double in unprecedented funding surge

It's not your imagination: AI seed startups are commanding higher valuations | TechCrunch

Pete Martin remembers raising a $5 million seed round at a $25 million post-money valuation for his AI-powered cybersecurity company Realm way back in 2024, aka, like a thousand "AI years" ago. That valuation seemed high for that amount at the time, he recalled. But today, "it's pretty typical" to see a $10 million seed round at a $40 million to $45 million post-money valuation, he said, especially if you are an AI company. Actually, that type of thing happens only if you are an AI company, as investors are showing little interest in anything else. At the most recent Y Combinator Demo Day held in March, everyone was talking about how high the companies were priced, said Ashley Smith, a general partner at the early-stage fund Vermilion. Many startups had already landed six- to seven-figure customer contracts, including a company that was only eight weeks old, she said, so there were companies asking for $5 million at a $40 million post money. This time, it was more than the so-called "YC tax," meaning how much more an investor is willing to pay just because the startup went through YC, she believed. Even with those early revenue numbers, Smith said investors in this market are pricing rounds "years ahead of traction." The big venture firms, flush with cash, are also moving into rounds earlier, driving up startup prices and valuations in hopes of cashing in big if these companies exit or IPO one day. Smaller VC firms have an insatiable appetite for AI companies, too. As an investor focused on AI infrastructure, Smith said she can easily find herself priced out of a round, especially when a larger firm moves in. That's one reason why seed deal count is down but valuations are up, both founders and VCs said, and data from Carta shows. Shanea Leven, founder of the enterprise AI application platform Empromptu, blames Cursor, which, in early 2025, hit $100 million in revenue in just 12 months. It was one of the first high-profile AI companies to raise the bar for how fast these startups could gain traction, although it certainly wasn't the only one. Others include Lovable, Bolt, OpenEvidence, ElevenLabs, all boasting about their fast traction. Though these are outliers, it's hard for some not to feel the reverberated heat. "The investors are expecting that now," she said. "The pressure is at an all-time high, not to be a billion-dollar company, but a $50 billion." VCs are quick to defend the rationale of rising seed valuations. For instance, Marlon Nichols, managing general partner at MaC Ventures, said the proof is in the form of traction right out of the gate, driving seed pricing. When he launched his firm back in 2019, he said his average entry check was $2.5 million. Today, it's $5 million. "The best seed-stage companies do not look like traditional seed-stage companies anymore," he said. The advancement of AI tools means that founders can get to minimal viable products and gain early customers faster than ever before, even among big enterprises, which are eagerly looking for ways to employ AI. Nichols' last two seed investments were already generating more than $2 million in revenue, with "paid pilots from large enterprises" and "a clear line of sight to full commercial agreements." He cut checks between $3 million and $4 million, and agreed to value the startups at $25 million and $30 million post-money, respectively, which is a lot compared to a few years ago. The founders' backgrounds also played a role in his term-sheet offers. "They had relevant experience" and "a track record of execution," he said, "which reduced a lot of that early-stage risk." Plus, investors are willing to pay astronomical premiums for proven AI talent, favoring second-time founders or those with the right pedigree from the right previous employer (like OpenAI). This, too, brings up expected valuations across the board. "There's a war for great researchers right now, and I don't think it's good or bad; it's just the current state of the market," Amber Atherton, a partner at the early-stage consumer fund Patron, said. That's what is driving the most extreme seed valuations, like ex-OpenAI Mira Murati's $2 billion seed for Thinking Machine Labs at a $12 billion valuation. Leven, a second-time founder, said her startup's valuation at this stage is double that of her first at a similar stage. Not only is her latest company AI, but it also has much more traction than her previous startup did at this time, showing how fast new companies like hers can grow. "I currently have multiple six-figure contracts, currently closing a seven-figure. You have to have that to raise," Leven said. "A friend of mine is raising a similar round, not AI, and it took her two years versus my three weeks, to get half of what I got." Seed VCs like Vermilion's Smith are dealing with the rise in seed valuations by doing more pre-seed deals. Pre-seed startups are the kind of startups that seed companies used to be years ago: very early, pre-revenue. Jonathan Lehr, a general partner at Work-Bench, is investing out of a $160 million fund focused mainly on seed rounds, though he said the firm has become "increasingly comfortable" going in at pre-seed as companies scale much faster. It's more common to see investors pour capital into startups earlier, as increased exposure is just the price of "accessing companies that have the potential to scale faster and become category leaders,"  Lehr described. Atherton, meanwhile, said to get a piece of these promising early-stage startups, the average check size for her firm's $100 million Fund II now ranges from $4 million to $5 million, up from the $1 to $2 million for its $90 million Fund I. "AI has raised the bar that much higher for founders to have a live product with users and revenue straight out of the gate," she said.  "Investors have to move faster and underwrite real-world traction much earlier because the best founders are shipping products with users and revenue almost immediately." So seed VCs aren't "backing ideas" anymore, they are "backing early evidence of real consumer product demand," she described. Seed VCs are also moving faster, "from slow diligence to high-conviction decisions on distribution, retention, and founder taste." As the stakes have risen, so have investors' expectations. It's no longer enough, Atherton said, for a company to simply build and ship a product. Anyone can do that these days. It's not even about the traction, though that helps a lot. It's about the future, the story founders can tell about how they will be able to execute better than everyone else and defeat everyone in the market. That's what these seed VCs believe will drive these startups into durable, $50 billion+ companies, or at least to some sort of profitable exit. "People are just trying to survive the pressure," Leven said. "Otherwise, you won't have enough money to grow, to actually compete." The good part about raising a lot of money at the earliest stages as a founder is that it helps the company move fast and hire expensive talent. VCs know, as they price their term sheets, that talent in the age of AI is costly, as is running the AI models that underpin these startups, and vying with other well-capitalized competitors, sometimes big SaaS competitors already worth billions. Everyone, Leven said, is trying to re-create the magic of Google buying Wiz. But the risk is also higher. Founders must grow their companies into businesses that justify the high early valuations before they need more cash. Series A investors are also expecting bigger, faster, and more. Nichols and his firm are now underwriting more young companies than ever, with the new expectation that they'll hit their milestones within about 18 months. "That discipline is just as important as backing winners," he said. Higher seed valuations mean less margin for error, Lehr said, adding: "Less room for experimentation, less tolerance for pivots, and more scrutiny if progress doesn't match the capital raised." Martin, the cybersecurity founder, successfully raised his Series A late last year, saying the benchmark was unproblematic for his company to clear. But he, too, had a warning for founders. "You can end up stuck in between," Martin said. "Too expensive for new investors, but without the traction to justify the next round."

Q1 2026 Shatters Venture Funding Records As AI Boom Pushes Startup Investment To Nearly $300B

The first quarter of 2026 was unlike any other for venture investment, driven by unprecedented spending on AI compute and frontier labs. Crunchbase data shows investors poured $297 billion into 6,000 startups globally in the quarter, up around 150% quarter over quarter and year over year. That marks an all-time high for global venture investment not approached by any other quarter on record. In fact, startup investment in the first quarter of 2026 alone totaled close to 70% of all venture capital spending in 2025. The quarterly sum also tops all full-year investment totals prior to 2018. Q1's startup investment largely went to AI startups and disproportionately to a handful of U.S.-based companies in record-setting deals. Four of the five largest venture rounds ever recorded were closed in Q1 2026, with frontier labs OpenAI ($120 billion), Anthropic ($30 billion), xAI ($20 billion) and self-driving company Waymo ($16 billion) collectively raising $186 billion, or 64% of global venture investment in the quarter. Overall, AI shattered records last quarter, with $239 billion -- 81% of total global venture funding in Q1 -- going to companies in the sector. The previous record was set in Q1 2025, when AI accounted for 55% of global venture funding. Table of Contents Valuation surge, capital concentration Along with the three major frontier labs and Waymo, another 10 companies raised funding rounds of $1 billion or more in Q1, in sectors spanning generative and physical AI, autonomous vehicles, semiconductors, data centers, robotics, defense and prediction markets. Those outsized rounds pushed overall startup valuations higher in Q1. The Crunchbase Unicorn Board added $900 billion in value during the quarter, marking the largest valuation bump in a single quarter. US above 80% U.S.-based companies raised $247 billion, or 83% of global venture capital in Q1, Crunchbase data shows. That's up significantly from 71% in Q1 2025, which was already well above historical averages in the decade before 2024. The second-largest market globally for venture funding in Q1 was China, with $16.1 billion invested. The U.K. followed, with $7.4 billion invested. Both countries were up quarter over quarter and even more significantly year over year. Late-stage hike The Q1 funding surge was concentrated in late-stage funding, which reached $244 billion -- up 203% year over year -- across 582 deals. A total of $232 billion was invested in 157 late-stage companies that raised rounds of $100 million and more. Early stage up 38% Early-stage funding totaled $40.6 billion across 1,800 deals, Crunchbase data shows. Funding was up marginally quarter over quarter but up 38% year over year from $29.4 billion. Much of that increase went to Series A rounds, Crunchbase data shows. Series B deals were down quarter over quarter but still up year over year. Seed funding up 30% Seed funding totaled $12 billion, up 30% year over year, though the increase was entirely due to larger rounds, with deal counts falling 31% year over year to 3,700. IPO slowdown, M&A pick up Record venture investment in U.S. companies did not translate into a stronger IPO market in Q1. In fact, the U.S. market for new listings slowed in Q1 amid a broader stock market selloff in software, although China's IPO market picked up. A total of 21 venture-backed companies exited globally above $1 billion in Q1. Thirteen of those were from China, four more from elsewhere in Asia, and four from the U.S. The largest IPO in Q1 was Japan-based PayPay, a fintech for mobile payments valued at $10 billion upon listing. Two foundation lab companies from China -- Z.ai and MiniMax -- debuted on the Hong Kong Stock Exchange, each valued at more than $6 billion. While the IPO market was somewhat lackluster, startup M&A was strong in Q1 with exits cumulatively valued north of $56.6 billion, Crunchbase data shows. That marked the third-highest startup M&A quarter since the downturn of 2022. The largest M&A deals in Q1 were Savvy Games Group's $6 billion planned acquisition of ByteDance's gaming platform Moonton, and Capital One's planned $5.15 billion acquisition of fintech startup Brex. Public pressure While frontier lab megarounds defined Q1 2026, a closer look at the data shows every startup funding stage grew last quarter, as did round sizes across the board. And unlike the cloud and mobile era, this cycle is also being built in the physical world, with massive capital flowing not just into software, but infrastructure, autonomous vehicles, robotics and manufacturing. Now, with startup valuations surging and a backlog of companies with unprecedented sums of private capital behind them, pressure is intensifying on the IPO markets to reopen in 2026. Related Crunchbase queries: Methodology The data contained in this report comes directly from Crunchbase, and is based on reported data. Data is as of March 31, 2026. Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year. Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price. Glossary of funding terms Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less. Early-stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million. Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the "Series [Letter]" naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round. Technology growth is a private-equity round raised by a company that has previously raised a "venture" round. (So basically, any round from the previously defined stages.)

The Largest Recent Seed Rounds Are All For AI Companies

The stereotypical seed-funded company may be a scrappy startup with a shoestring budget. But in the age of AI, that's not where investors are concentrating their bets. Instead, recent months have served as a busy period for big commitments to seed-stage companies that are short on operating history and long on ambition. To illustrate, we used Crunchbase data to cull a list of the largest seed rounds of the past six months 1. Globally, at least 12 companies within these parameters pulled in rounds of $100 million or more. Physical AI is leading theme A majority of top seed funding recipients operate at the intersection of AI and the physical world. This includes the largest recent fundraiser, Paris-based Advanced Machine Intelligence, which raised $1.03 billion in a March seed round backed by a long list of prominent venture firms, individual investors and strategic backers. The startup is developing AI models that learn abstract representations of real-world sensor data and make predictions. Unconventional AI, meanwhile, is operating at the intersection of AI and energy. The San Francisco company secured a $475 million seed round in December to develop energy-efficient silicon circuits that demonstrate similar non-linear dynamics to biological neurons. Also up there is Periodic Labs, which is applying AI to science and experimentation, with goals including automating materials design in areas like semiconductor manufacturing, transportation and power grid engineering. The San Francisco company raised $300 million six months ago. China-based startups have also recently landed large seed rounds tied to physical AI. This includes Lingchu Intelligence, developer of an AI platform for robotic device development that simulates physical world environments, and Humanoid Robot Innovation Center, a developer of AI robotic technology. Humans and AI AI startups haven't forgotten about humans either. One example is Merge Labs, a startup co-founded by Sam Altman that raised $252 million in an OpenAI-led financing earlier this year. The San Francisco company is focused on applying AI advancements to brain-computer interfaces, Humans&, the second-largest seed recipient, is a bit harder to categorize. The Silicon Valley startup, which raised $480 million in January, is focused on foundational models "centering around people and their relationships with each other." A new era for seed In addition to spotlighting investors' growing enthusiasm for AI, the latest batch of jumbo seed round recipients also demonstrate changing dynamics around how capital is allocated at the earliest stage of company formation. The general trend points to fewer deals and larger average seed round sizes. While the majority of seed-stage deal counts still occur for rounds $5 million and under, that percentage has trended down over time. Meanwhile, larger and outlier seed rounds of $10 million and above have climbed from 2% of deals in 2018 to 9% over that time. Seed rounds of over $100 million -- once exceedingly rare -- are also more commonplace, with 27 such deals announced globally since the beginning of 2025, per Crunchbase data. Of course, it's too soon to say if such large checks written at such a nascent startup stage will prove worth it in hindsight. For now, it's certainly at least a boon to the seed-stage companies at the receiving end, which have the rare opportunity to iterate highly ambitious missions without the added burden of having to do it all on a shoestring budget.

PitchBook: US venture funding surges to record $267B as OpenAI, Anthropic and xAI dominate AI deals - SiliconANGLE

PitchBook: US venture funding surges to record $267B as OpenAI, Anthropic and xAI dominate AI deals U.S. venture capital activity surged to unprecedented levels in the first quarter of 2026, driven by a small number of outsized artificial intelligence deals that reshaped the overall market profile, according to a first look at the quarterly PitchBook-NVCA Venture Monitor report released early Friday. According to the report, $267.2 billion in deal value was recorded during the quarter, more than doubling the previous quarterly record, though the total was heavily concentrated among a handful of companies. To the surprise of no one, a significant portion of that capital flowed into leading artificial intelligence firms. Big deals in the quarter included OpenAI Group PBC raising $122 billion in funding, followed by $30 billion for Anthropic PBC, $20 billion for xAI Inc. and $16 billion for Waymo. Databricks Inc. also raised $7 billion, with the five deals representing 73% of total U.S. venture deal value during the quarter. Excluding those transactions, underlying investment activity remained relatively stable, with $72.2 billion spread across an estimated 4,595 deals, broadly in line with recent quarters. AI accounted for 89% of total deal value in the U.S. in the quarter, with AI increasingly viewed as a core requirement for attracting capital across sectors, including healthcare, enterprise technology and consumer applications. The concentration of funding also highlights a widening gap between a few large-scale AI platforms and the broader startup ecosystem. On the exit front, exit value reached $347.3 billion for the quarter, setting a new quarterly record, though much of that sum was driven by SpaceX Inc.'s $250 billion acquisition of xAI. Excluding the xAI deal, exit activity reached $97.3 billion which was the strongest quarter since late 2021, indicating a gradual recovery in liquidity conditions. Other notable exits completed in the quarter included Google LLC's $32 billion acquisition of Wiz Inc., the largest corporate acquisition of a venture-backed company on record, along with Marvell Technology Inc.'s $6 billion purchase of Celestial AI Inc. and Palo Alto Networks Inc.'s $3.4 billion acquisition of Chronosphere Inc. For initial public offerings, there were also some positive signs, with 15 venture-backed listings in the quarter. The number puts 2026 on pace for about 60 IPOs, slightly above 2025 but still below historical norms. Fundraising activity also showed signs of improvement but, like through 2025, remained uneven. Venture funds raised $47.8 billion during the quarter, though capital was concentrated among a few established managers. Thrive Capital Management LLC's $9 billion growth fund accounted for nearly one-fifth of total commitments, highlighting ongoing challenges for emerging managers seeking institutional backing in a more selective fundraising environment. Across the Atlantic in Europe, VC deal activity commenced the year strongly, buoyed by several large rounds involving AI startups. The report does note, however, that the European VC fundraising landscape in the first quarter overall remained subdued, with figures relatively consistent with a weak showing in 2025 amid the tough capital-raising environment. In the Asia Pacific region, the quarter was on track with recent quarterly run rates, roughly 3,000 to 3,500 deals per quarter since 2023. Exit activity remained the clearest constraint on the Asian VC ecosystem, with both deal count and value having been flat to down since 2023 with no visible inflection in the first quarter.

Venture Capital Explodes: $300 Billion Floods Startups In Historic AI-Fueled Surge

Venture investments saw "unprecedented spending" on AI compute and frontier labs, as investors poured $300 billion into 6,000 startups during the first quarter of this year. Notably, funding for startups in the first quarter of 2026 alone accounted for nearly 70% of the total venture capital invested throughout all of 2025, a report by Crunchbase noted. This quarterly figure also exceeded the annual investment totals seen in any year prior to 2018. Much of the capital in Q1 was concentrated in artificial intelligence startups, with a significant share directed toward a small group of U.S.-based companies through record-breaking deals. Four of the five largest venture funding rounds ever documented occurred during this period. Leading the group were frontier AI firms OpenAI ($122 billion), Anthropic ($30 billion), xAI ($20 billion), along with autonomous driving company Waymo ($16 billion). Together, these four companies secured $188 billion, representing about 65% of total global venture investment for the quarter. Artificial intelligence dominated last quarter's funding landscape, reaching unprecedented levels. Companies in the sector attracted $242 billion -- about 80% of all global venture capital in Q1. This far surpasses the prior high set in the first quarter of 2025, when AI made up 55%. The IPO market was "somewhat lackluster" in Q1, with few companies going public, however, start-up M&A was strong. Exits were valued at $56.6 billion, the third-highest startup M&A quarter since 2022, Crunchbase reported. Some of the largest M&A deals in Q1 included Savvy Games Group's acquisition of mobile game developer Moonton from ByteDance for approximately $6 billion, as well as Capital One's planned acquisition of fintech startup Brex for $5.15 billion. Q1 2026 was dominated by massive funding rounds from leading labs, but the broader data reveals that growth occurred across every stage of startup funding, with average deal sizes increasing overall. Unlike the cloud and mobile boom, this wave of innovation extends beyond software into the physical world, attracting significant investment in areas like infrastructure, autonomous vehicles, robotics, and manufacturing, Crunchbase noted. As startup valuations climb and many companies sit on record levels of private funding, expectations are rising for the IPO market to reopen in 2026. Photo: Photon Photo/Shutterstock This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Startup News Today: AI Boom Fuels Record $300B Venture Funding Surge in Q1 2026

This may be a clear indication of investors' affinity toward large-scale AI platforms that demand high computing infrastructure. The $300 billion raised in just three months represents a sharp year-on-year jump and accounts for a significant share of total global venture funding seen in previous full years. The investment volume shows that is no longer an emerging technology but is instead one of the key technologies driving global technological progress. The current round of funding shows similarities to past technology boom cycles, according to industry analysts. The current round of funding differs from the past technology boom in that the amount of funding is larger. The larger amount of funding is used in the development of artificial intelligence in different industries, such as healthcare and mobility.