Venture capital investors are raising new funds at an increasingly rapid pace as rising valuations for OpenAI and Anthropic concentrate investments in a small number of AI companies. Limited partners (LPs), which provide capital to venture firms, remain optimistic about potential returns but are raising concerns about accelerated fundraising cycles and portfolio risks.
Beezer Clarkson of LGT Capital Partners and Amit Bhatti of TrueBridge Capital Partners discussed these developments in a recent interview, describing the current investment environment as a “yellow light” situation. Both investors said the rapid pace of funding and rising valuations require closer attention, although neither considers the concentration of AI investments an immediate warning sign.
OpenAI and Anthropic Investments Concentrate Across Venture Funds
Bhatti explained that venture capital returns typically depend on a small number of successful companies, making portfolio concentration a normal part of the industry. He cited Databricks, SpaceX, and Stripe as examples of companies that account for substantial portions of older venture portfolios.
However, the valuations of OpenAI and Anthropic have increased unusually quickly, leaving multiple venture funds exposed to the same companies. Clarkson added that early-stage investing still offers greater diversification because these funds typically invest smaller amounts across more startups.
Venture Firms Return to Fundraising Within 12 to 18 Months
According to Clarkson, venture firms traditionally raised new funds every two to two-and-a-half years, but some now return to investors after just one year. Bhatti reported a similar acceleration, with fundraising intervals shortening from 24 to 36 months to approximately 12 to 18 months.
Bhatti attributed the faster pace partly to larger investment rounds, noting that seed funding amounts have nearly doubled. Some venture firms are also increasing their existing fund sizes midway through investment cycles rather than launching entirely new funds.
Limited partners are responding by reducing individual commitments instead of withdrawing from established relationships. Clarkson said some investors that previously committed $10 million per fund now contribute $5 million when managers return earlier than expected.
Secondary Sales Provide More Options for Investor Liquidity
Both investors said secondary transactions have become an increasingly important way for venture funds to return capital without waiting for acquisitions or initial public offerings. These transactions allow investors to sell portions of their holdings while companies remain privately owned.
Bhatti suggested that selling 20% of a successful investment could sometimes generate enough proceeds to return an entire fund’s invested capital. He also noted that employee share sales are becoming more common, although some venture firms discourage early liquidity events when they believe employees should retain longer-term incentives.
Recent exits involving SpaceX, Cerebras, and major acquisitions have also contributed to improved investor liquidity following two slower years.
Emerging Venture Managers Continue Raising Smaller Funds
Despite substantial capital flowing toward established venture firms, Clarkson and Bhatti said newer managers continue securing funding. First-time funds commonly raise between $25 million and $50 million, while some emerging investors begin with just $5 million to $10 million.
Bhatti said TrueBridge has backed young investors, including managers aged 22 and 23, who developed relationships with AI startup founders through university accelerator programs. Clarkson added that investors are increasingly willing to support managers who continue operating businesses while investing.
LGT typically commits at least $5 million to individual funds and generally prefers holding no more than 20% of a fund’s capital. TrueBridge usually invests between $3 million and $5 million, although it has occasionally provided as much as half of a fund’s capital.
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