Just 4 deals made up nearly half of AI VC funding in Q3

Nov. 24, 2025 - PitchBook News

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Just four of the 1,086 VC deals recorded for AI startups in Q3—funding rounds for xAI, Anthropic, Nscale and Mistral—accounted for nearly half of the quarter’s total deal value, according to our latest Emerging Tech Research. As fears over a potential AI bubble fester, VCs are backing fewer companies—but investing heavily into that select group.

Investors are continuing to pour capital into startups developing large language models because nearly every AI application will be built on top of them, according to Dimitri Zabelin, a senior AI analyst and author of the report.

This segment, unlike companies developing applications that use AI, or vertical applications, has attracted the most capital by far.

"You could say, we don't know who the winners are going to be yet at the vertical application layer," he said. "You're fairly certain, though, it's going to be built on these foundational models."

Anthropic, xAI and Mistral all develop LLMs. In July, Elon Musk's xAI raised $10 billion in debt and equity from Morgan Stanley. September saw Anthropic raise $13 billion from Lightspeed, Iconiq Capital and others, while Mistral raised €1.7 billion ($1.96 billion) from investors including Index Ventures and Andreessen Horowitz.

But then there's Nscale, which raised $1.1 billion in September from investors like Point72 and G Squared. The company is a GPU cloud startup similar to CoreWeave, which rents out remote access to Nvidia GPUs, allowing customers to train and fine-tune AI models.

According to the Q3 research, more investors are focusing on backing AI-specific semiconductor startups, with funding exceeding the recent historical average of $1.9 billion. In Q3, overall deal value in the segment reached $3.8 billion.

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