Silicon Valley venture capitalists are betting on the circle of acquaintances, propping up the myth and bubble of the tens of billions of dollars' valuation of AI.

On July 3rd, according to the latest data, US venture capital firms are increasing their investment in existing portfolio projects.

Statistics from Silicon Valley data research firm PitchBook show that as of mid - June, the total financing of startups led by existing investors (Insider - Led Rounds) has exceeded $69 billion. This figure not only surpasses the total financing of last year ($67 billion) but is also expected to break the historical record set during the zero - interest - rate period in 2021.

The amount of reinvestment by existing investors in US venture capital

01 The money - attracting effect of leading enterprises is significant

The huge financing of two major tech unicorns, OpenAI and US defense technology company Anduril, has become the focus of the market this year. These two companies alone account for more than 60% of the total refinancing by existing investors.

Notably, existing venture capital firms are making additional investments at higher valuations. This "old - shareholder top - up" model is becoming a new investment trend.

This investment model brings two obvious advantages to startups:

On the one hand, founders can retain more equity. Compared with the shareholding ratio usually required by new investors, existing investors are often willing to accept a smaller equity stake;

On the other hand, startups can skip the complex process of approaching new investors, especially the cumbersome steps including financial audits and customer due diligence.

Miles Clements, a partner at venture capital firm Accel, said: "Compared with bringing in new investors, startups can make more flexible financing arrangements with existing investors."

Accel's investment in enterprise software company Linear is a representative case. Accel invested in Linear as early as 2023 and became a member of its board of directors. In April this year, before Linear launched a new round of financing, Accel proposed an investment plan of "no new board seats and less equity dilution". Eventually, in June, Accel led an $82 million investment in Linear, valuing the latter at $1.25 billion.

02 Investment concentration: AI becomes the core betting area

The financing amount of repeated investments by existing investors has increased, and these investments are becoming more and more concentrated in specific fields. As of now, there have been 477 rounds of financing led by existing investors this year, the same as the same period in 2024.

If this trend continues, the number of reinvestments by existing investors may increase significantly, even matching the full - year record of 2024 (1,004 rounds).

Companies such as Thrive and SoftBank are increasing their investments in the fields of AI, finance, and defense technology, especially in companies they believe have a leading position.

For example, the Founders Fund, founded by Silicon Valley angel investor Peter Thiel, led the first two rounds of financing for Anduril since 2017. Since then, the fund has continued to lead Anduril's financing in 2024 and this year, with a cumulative investment of up to $2 billion.

Venture capital firms that have led or co - led multiple rounds of investment in the same AI startups

Meanwhile, SoftBank Group is leading a $40 billion financing for OpenAI, and the latter's valuation has soared to $300 billion. In the autumn of 2024, SoftBank invested $500 million in a financing round led by Thrive Capital when OpenAI's valuation reached $157 billion. In addition, SoftBank spent $1.7 billion to acquire shares held by some current and former employees of OpenAI.

Thrive is also concentrating its investment on Anysphere, the developer of programming assistant Cursor. In May this year, Thrive led a $900 million financing for Anysphere, and it also led a round of investment in Anysphere last December.

03 The enthusiasm remains, but the risks are not reduced

For the fastest - growing companies, investment demand has eliminated the past negative impression of existing investors.

There was a time when this type of investment was seen as a last resort for startups that couldn't attract new investors, and it also worried limited partners of venture capital funds - they were concerned that investment managers might pay too high a premium, thus affecting the fund's book returns.

In fact, this strategy of repeated and concentrated betting does carry hidden risks. When the invested companies perform well, everyone is happy. However, if the company's performance is poor or it goes bankrupt, high - valuation investments in later rounds will magnify losses.

Cybersecurity company Lacework is a typical example: Sutter Hill Ventures made consecutive additional investments in four rounds starting from the seed round in 2015, pushing its valuation up to $8.3 billion, but it was eventually sold at a "rock - bottom price" of $200 million.

Equally regrettable is virtual meeting platform Hopin. Institutional Venture Partners led three rounds of investment, pushing its valuation to $8 billion. However, as the pandemic ended, market demand dropped sharply, and the company eventually sold part of its business at a price far lower than its original valuation.

However, failed cases have not dampened the enthusiasm of investment institutions. More and more venture capital firms are starting to follow the strategy of the Founders Fund and concentrate their investments in the same companies. In addition to continuously increasing its investment in Anduril, the fund has also led five rounds of financing for Ramp, whose latest valuation has reached $16 billion.

Logan Bartlett, a managing partner at Redpoint Ventures and an early investor in Ramp, said: "There are only a few truly high - quality targets in each field. Since you've hit the jackpot, you naturally want to maximize the investment value. "

This article is from "Tencent Technology", author: Jin Lu. Republished by 36Kr with permission.