Full Breakdown
Venture Capital Returns: A Focus on AI Investments
3/23/2026, 2:11:46 PM
Overview of Recent Venture Capital Performance
Recent data from the University of Texas Investment Management Company (UTIMCO) reveals significant returns in venture capital, particularly driven by investments in artificial intelligence (AI) startups. Thrive Capital's 2022 fund, for instance, has reported an internal rate of return (IRR) exceeding 126%, marking it as the largest single-year IRR recorded in UTIMCO's history. This remarkable performance is attributed to early investments in companies such as OpenAI, Cursor, and Base Power.
Key Players and Their Performance
Thrive Capital, which has made substantial bets on AI, is not alone in experiencing extraordinary returns. Notable Capital (formerly GGV Capital) reported a dramatic IRR increase for its 2023 fund, which surged from -48% to 96% within a year, largely due to investments in Anthropic and Fal. In contrast, older funds from Notable Capital, specifically those from 2016 and 2018, have not performed as well. Sequoia Capital has also shown positive trends, with its 2021 Seed fund's IRR rising from 6% to 11.3% over the past year.
The Impact of AI on Venture Capital Returns
The surge in returns can be largely attributed to the concentrated investments in AI companies. According to Altimeter managing director Meghan Reynolds, profits from three large language model (LLM) companies account for approximately 70% of all venture capital profits over the past decade. This trend highlights the transformative impact of AI on the venture capital landscape, as newer funds are seeing rapid markups early in their life cycles.
Criticism and Market Concerns
Despite the impressive figures, there are concerns regarding the sustainability of these returns. The IRR figures primarily reflect valuation mark-ups on private companies rather than realized gains, raising questions about their stability in the event of a market downturn. Critics argue that the current high valuations may not be sustainable, and any significant market correction could lead to substantial declines in reported returns.
Official Statements and Responses
Thrive Capital, Notable Capital, and Sequoia Capital have opted not to comment on the recent performance data. This lack of commentary leaves some questions unanswered regarding the strategies behind their investments and the potential risks associated with their high returns.
Conclusion and Future Outlook
As of November 30, 2025, UTIMCO's analysis of venture capital investments indicates a mixed performance across various funds. While some, like Thrive Capital and Notable Capital, have seen remarkable gains, others, such as HongShan and Peak XV, have struggled to maintain positive IRRs. The future of these investments remains uncertain, particularly in light of potential market fluctuations that could impact valuations significantly.
