Last week, the London-based Balderton Capital hosted an event to celebrate its 25th anniversary. The renowned venture capital firm, which has backed the likes of Revolut, Wayve and Darktrace, hired out the V&A museum for the lavish affair.
Candlelit tables ran the length of one of the venue’s stunning galleries. Guests, leading figures in the European tech world, were entertained by opera singers between courses. As champagne and cocktails flowed freely, revellers drifted between casino tables and choreographed dancing.
It was hands down one of the most spectacular parties I have ever been to. But as talk of inflated AI bubbles gets louder and louder, more than one person remarked during the live band that such flamboyancy felt like the last days of the Roman Empire.
This is because everyone in the tech world is on tenterhooks to see if — and when — the music is going to stop. My inbox is blowing up with “bubble” commentary and every day brings another canary in the coalmine, highlighting the Frankenstein market that AI has stitched together.
The latest look at the state of venture capital, released on Tuesday by PitchBook, the financial data company, shows just how distorted things have become. It highlights that in the private market, money is just as tightly concentrated on a few companies as it is on Wall Street, where a small clutch of tech companies have long been propping up the S&P 500. More than 40 per cent of all venture capital money so far this year in the US has gone into just ten companies.
The likes of OpenAI, Anthropic and Databricks have absorbed more than $100 billion of investment. The value of these companies has soared so high in such a remarkably short period that it feels a misnomer to call them “start-ups”.
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Take Databricks, which raised $1 billion at a valuation of $100 billion in September — a 61 per cent increase from its Series J funding round in December 2024. Or Anthropic’s $13 billion Series F round last month, which valued it at $183 billion, nearly triple that of six months earlier. In contrast, the number of early-stage rounds is falling.
Funding of AI companies hit an all-time high in the first nine months alone of 2025, the data shows. And there is a continued frenzy around AI investments. A meeting on a Monday can result in closing a round two weeks later, one British investor told me — a speed of investment completely out of the ordinary. Data from HSBC and Dealroom showed that money continues to flow into UK start-ups, which raised $9 billion in the third quarter of 2025, the second-highest third quarter on record.
Below the billion-dollar fundraisings, in the US the amount raised by venture capitalists themselves are is heading for its lowest level since 2017. This “fundraising drought” is mirrored in Europe, where the amount being put into VC stands at its lowest level for a decade.
The UK contributes about half of all European VC fundraising, but even that is weak, according to PitchBook, at about £7 billion so far this year— down nearly 40 per cent from 2024.
A lack of cash distribution back to limited partners (investors who provide the capital but have no role in managing the fund) means they are discouraged from reinvesting, PitchBook found. Fund managers are taking longer to close rounds.
Part of the problem is that a continued lack of exits means money is trapped inside private companies. And the IPO market remains muted, despite a few standout events such as the US listing in July of Figma, the design software firm.
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As company valuations soar, so does the pressure on them to produce exceptional returns, pushing the bar ever higher for what these businesses must deliver to satisfy their investors.
With eye-popping valuations, thin liquidity and capital hoarded in a small number of hands, the private market looks increasingly strange. The only certainty is the palpable anxiety about what it all means.
Katie Prescott is Technology Business Editor