SVB: AI Isn't Making VC More Efficient — M&A Up But Sub-$500M Deals Rarely Return Capital, Dollars More Concentrated Than Ever

SaaStr·medium signal

A follow-on SVB analysis via SaaStr reveals that despite record AI investment, the venture market is becoming less efficient: M&A activity is rising but smaller exits under $500M are rarely returning meaningful capital, and AI mega-rounds are consuming GP attention at the expense of early-stage portfolio support. The report describes two functionally separate VC industries now operating under the same label, with traditional early-stage venture remaining a genuinely difficult market for founders outside the AI hypergrowth tier. The efficiency narrative around AI — faster paths to liquidity, better capital allocation — has not materialized in the data.