Menlo Ventures raises $3 billion for AI startups in record fundraise

Menlo Ventures raised $3 billion for AI investments, the largest fundraise in the firm's 50-year history, as venture capital firms race to back the next generation of AI winners across infrastructure, applications, and healthcare.

"AI is creating one of the largest technology platform shifts we'll see in this lifetime," Matt Murphy, Partner at Menlo Ventures, said. "Many of the defining AI companies of the next decade have yet to be built."

The capital is split between Menlo Ventures XVII, the firm's flagship venture fund targeting seed and Series A rounds, and Menlo Inflection IV, which provides growth capital at Series B and beyond. The firm manages more than $8.5 billion in total capital and has backed more than 85 public companies and 170 exits through mergers and acquisitions.

The fundraise signals that institutional investors see AI as a multi-trillion-dollar opportunity still in its early innings. Menlo's portfolio includes Anthropic, Carta, Chime, Harness, and Uber, giving it a network that partner Venky Ganesan said helps attract top AI founders in a competitive fundraising market.

An AI-First Strategy That Started With Anthropic

More than three years ago, Menlo reorganized around AI, recognizing the launch of ChatGPT as the beginning of a platform shift that would reshape the technology stack and global economy. The firm first invested in Anthropic in 2023, when the company was pre-product and pre-revenue and many believed the foundation model market had already been decided. A year later, Menlo led the Series D and launched the Anthology Fund with Anthropic, an AI innovation fund giving the firm early access to emerging ideas and critical infrastructure.

From that anchor, Menlo expanded across the AI stack. On the infrastructure side, the firm backed Axiom, Chai Discovery, Goodfire, Neon, OpenRouter, and Skild AI. As the application market matured, it invested in Eve, Higgsfield, Legora, Lovable, Manifest OS, OpenEvidence, Semgrep, Suno, and Wispr Flow.

Fifty Years of Being Early on Platform Shifts

Menlo's track record of identifying technology waves before they become obvious includes incubating Gilead Sciences before biotech became a defining sector, backing Siri years before voice became a mainstream interface, funding Hotmail as one of the first free web apps, investing in Roku before streaming reshaped entertainment, and leading an early round in Uber when ridesharing was still unproven at scale.

"Being early has always been part of Menlo's DNA," Shawn Carolan, Partner at Menlo Ventures, said. "The biggest success stories never look obvious at the outset. To be a good early-stage investor, you have to imagine a market before it exists."

What This Means for AI Startup Valuations

The $3 billion fundraise adds to a wave of massive capital pools concentrated on AI. With more than $8.5 billion under management, Menlo joins firms like Sequoia Capital, Andreessen Horowitz, and Lightspeed Venture Partners in deploying billions into AI startups, a dynamic that is pushing up valuations across seed, Series A, and growth stages. For founders, the abundance of capital means more leverage in fundraising negotiations. For limited partners, the question is whether the returns from AI will justify the concentration risk — a bet that hinges on whether the current crop of AI startups can generate the revenue and margins to match their billion-dollar valuations.

This article is for informational purposes only and does not constitute investment advice.