The venture capital landscape in 2025 is increasingly defined by a concentration of power. Across fund size, investment stage, geography, and sector, capital is consolidating in fewer hands and flowing toward fewer companies. This has created a challenging environment for emerging fund managers and non-consensus founders, but it has also opened the door for focused investors to play a different game.
At Remagine Ventures, I’ve seen how these macro trends manifest in a local context. Israel is a powerful case study of how capital concentration affects innovation ecosystems and where the pockets of opportunity still exist. In this post I wanted to share what is currently happening in the world of venture, the impact of this on the Israeli market, and how can small funds like Remagine still create wins in one of the most concentrated venture markets in history.
The Shifting Power Structures in Global Venture
Fund Consolidation
In 2024, the top 30 venture firms secured 75 percent of all U.S. VC fundraising. Just nine of them captured half of the total capital raised. Emerging managers and those outside the top 30 collectively raised only 14 percent. As the industry matures, a small number of mega-funds now dominate, offering far more than capital through platforms, services, and global reach. I’ve written about the concentration of capital in January 2025, and it’s interesting to see that this trend has only increased in the first half of 2025.
AI as the New Center of Gravity
AI startups received 53% of all global venture capital dollars invested in the first half of 2025. In the US, 64% of VC dollars invested went to AI, and one third of that capital went to 5(!) companies. That includes:
- $40 billion to OpenAI
- $14.3 billion to Scale AI
- $5 billion to xAI
- $2 billion to Safe Superintelligence at a valuation of $32 billion
- $2 billion to Thinking Machines Lab at a valuation of $12 billion
Interestingly, all but Scale AI were once involved in OpenAI as C level or founders!
Last year, one-third of global venture capital went to AI startups. Investors are attracted by the promise of scalability, defensibility, and disruption. With a sense of urgency and fear of missing out, many firms are concentrating capital into increasingly similar bets. Earlier this month I wrote about the AI Elephant in the room, which goes deeper into the challenges with AI investments at the moment.
Geographic Imbalance
Silicon Valley retained its dominance in the first half of 2025, attracting 68% of U.S. funding in the first half of 2025. The US is a big country, but California’s proximity to Big Tech, deep technical talent, and strong AI activity have reinforced its gravitational pull, even as other regions try to compete.
Later-Stage Bias
The trend of late-stage funding dominating the market, which saw an increase of over 70% in Q4 2024 compared to the previous quarter, and surpassing Q4 2023 levels, is explicitly expected to continue into 2025. This surge has been primarily fuelled by an increase in billion-dollar funding rounds, particularly within AI companies.
What this means is that it’s becoming more challenging for early stage startups to secure their pre-seed, seed and series A funding. As you can see in the following chart on US pre-seed funding by quarter, while more money is being deployed overall, it’s spread across a much lower number of companies, nearly half of the deal count of Q2 2023.
Looking at the benchmarks for raising series A by A16Z, the goal post has significantly moved up with generative AI. Startups are expected to achieve more revenue, at a shorter period of time and with less resources than ever before.
What does it mean for non-GenAI startups? According to A16Z, whether the company is using GenAI or not, it’s being compared to one.
This focus on later stage, has perhaps contributed to the ‘series A crunch’ only 15.5% of companies that raised their seed by Q1/Q2 2023 (two years ago) managed to secure a series A two years later.
The Age of Consensus
This is one of the most consensus-driven markets the industry has ever seen. In the first half of 2025, over one-third of venture dollars went to just five companies. More than half of LP commitments went to twelve funds. As more investors rely on the same AI-powered tools for sourcing, diligence, and thesis development, the market is converging around the same ideas. While that can create short-term winners, it also reduces the opportunity for true outlier outcomes.
I liked this take by Dan Scheinman, who argues that when everyone Zigs, you should consider Zagging…
Israel’s Version of Venture Concentration
In Israel, these global dynamics have taken on a distinct local flavour. The market is seeing what some have described as a “two AI state solution”—a bifurcation between companies riding the AI wave and the rest of the economy struggling to stay relevant.
AI startups now represent 25 percent of Israeli tech ventures and attract close to half of total VC investment. But outside the tech bubble, a Central Bureau of Statistics survey in June 2025 found that 74 percent of non-tech businesses believe AI is irrelevant to their operations. The disconnect is real and growing, with potential long-term economic consequences.
Funding surge creates a winner takes all market
Israeli startups raised $9.3 billion in funding in the first half of 2025 (according to Startup Nation Central), marking the strongest half a year since 2022. On the surface, this looks like a recovery. But the distribution tells a different story.
Amir Mizroch articulated this nicely in Israel Tech Insider:
Israeli tech’s H1 2025 funding surge masks a brutal winner-take-all consolidation that’s quietly killing the startup ecosystem. While $5.24 billion across 199 deals marked the first time since H2 2022 that funding crossed $5 billion, the distribution tells a darker story: just 17 mega-deals ($50M+) consumed $2.01 billion—68% of all capital—leaving 182 companies scrapping over table scraps. VCs have essentially abandoned new bets, desperately propping up existing portfolios as follow-on investments dominate while both seed and Series A rounds declined since Q4 2024. The math is merciless: 300-350 new companies entered an ecosystem where deal volume sits at late-2023 nadir levels, creating Darwinian conditions not seen since COVID’s onset. Google’s anticipated $32 billion Wiz acquisition has inflated cyber valuations across a sector where 250+ deals closed during 2020-2022’s boom—most now facing brutal reality checks against impossible benchmarks. The bifurcation between mega-winners and the desperate masses represents more than market correction—it’s the real-time creation of a startup aristocracy where only the pre-funded survive
Where Can Smaller Funds Win?
The current concentration of capital in late-stage and mega-deals creates real challenges but also real opportunities for smaller, specialised funds like Remagine Ventures. While large firms chase billion-dollar AI rounds and de-risked growth stories, smaller funds can succeed by playing a different game.
First, the early-stage market is underserved. As we see with the series A crunch, the metrics needed to Pre-seed valuations in Israel remain attractive compared to the U.S., and many promising startups are overlooked simply because they don’t yet fit the consensus narrative. Smaller funds with deep domain expertise can spot talent early and move quickly, often being the first institutional partner on the cap table.
Second, in a market dominated by uniform thinking and AI-generated theses, there’s a growing premium on originality and human judgment. When everyone zigs, there’s value in zagging. Contrarian bets, driven by founder intuition, sector expertise, and pattern recognition, are more likely to come from nimble funds not bound by committee decisions.
Finally, early-stage founders still want and need hands-on investors. Smaller funds can play a critical role in helping companies bridge to Series A, navigate capital efficiency, and avoid valuation traps. In a market flooded with capital at the top, trust and conviction matter more than ever at the beginning.
At Remagine Ventures, we are actively investing in pre-seed Israeli startups. In a way, that is contrarian as less funds are deploying. We continue to believe that the most compelling opportunities emerge from the edges. In Israel and beyond, the path to outlier returns often starts where few others are looking.
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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