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# How AI Mega-Rounds Impact Seed Investing
- URL: https://www.therecursive.com/how-ai-mega-rounds-impact-seed-investing-zubr-capital/
- Published: 2026-09-09T12:27:54.000Z
- Updated: 2026-09-09T12:27:54.000Z
- Description: As mega-rounds rewrite early venture rules, boutique and emerging investors are being forced to adapt their playbooks, or risk getting priced out of the action.
- Author: Oleg Khusaenov
- Tags: Guest Articles, Investors, Deals, AI

AI mega-rounds are changing how seed investing works, and we can see the impact at many levels.

First, this change is evident in the data. [Crunchbase](https://news.crunchbase.com/venture/seed-funding-skewing-larger-ai-competitive-data?ref=therecursive.com) shows that both the number of deals and total funding in rounds from $200,000 to under $5 million in the US dropped by about 20% in 2025\. The rounds from $5 million to under $10 million remained relatively flat. **Only the $10 million-plus rounds grew. They accounted for 51% of all US seed funding**, up from roughly a third in 2024.

At [Zubr Capital](https://zubrcapital.com/?ref=therecursive.com), we wanted to see how far this shift had traveled down the market, so we reviewed the data and looked at **how other funds were responding**.

While figures like those from Crunchbase cover the entire seed market, signs suggest AI is driving the split. According to the same reporting, **many larger funds that invest across different stages are now backing promising AI companies earlier and at higher valuations**. As these larger investors move into seed, smaller funds are shifting their timing. They are rethinking how many companies to back and how to finance later rounds.

## The battle for AI winners begins at seed

Large funds are investing in promising AI companies earlier because they want to secure meaningful ownership **before competition intensifies** and valuations rise. If that bet pays off, their larger capital base lets them keep investing through Series A, Series B, and beyond. **A smaller seed fund usually cannot do the same.**

In late July 2026,[ PitchBook](https://pitchbook.com/news/articles/a-few-vc-firms-are-poised-to-win-the-future?ref=therecursive.com)’s 30 leading VC firms, selected based on their investment track record, participated in seed deals accounting for 34% of global seed deal value, up from 11.7% in 2023\. Their median seed check was $9.1 million, compared with $3.7 million across all seed deals globally. **For smaller funds, that creates pressure at two points**: matching the initial check and maintaining ownership as subsequent rounds grow.

Subsequently, **LPs** — the institutions and individuals that invest in VC funds — are **concentrating more of their capital with the largest managers**. In the first half of 2026,[ funds of $1 billion or more captured 68.3%](https://www.foley.com/insights/publications/2026/08/the-venture-market-is-not-recovering-it-is-reorganizing?ref=therecursive.com) of the capital raised by US venture funds. By mid-April of that same year, US-based growth and late-stage venture funds had already [raised a record $23.6 billion](https://www.wsj.com/pro/venture-capital/ai-boom-drives-record-capital-to-late-stage-venture-funds-662a0df0?ref=therecursive.com) as investors pursued a narrow group of fast-growing AI companies.

## How smaller funds compete when AI rounds get bigger

Some smaller funds are adapting as AI rounds grow. **Katie Stanton** of[ Moxxie Ventures](https://news.crunchbase.com/venture/seed-funding-skewing-larger-ai-competitive-data/?ref=therecursive.com) calls the market *bifurcated*. She points to a small group of fast-growing AI teams attracting massive Series A rounds. Everyone else faces a tougher fundraising environment. Moxxie now allocates 60% to 70% of its fund to first checks in new companies, up from 50%, and **meets founders earlier** — sometimes before product-market fit.

At[ 645 Ventures](https://645ventures.com/articles/what-were-watching-645-ventures-inflections-and-predictions-for-2026?ref=therecursive.com), the approach is to **make capital intensity part of the investment filter**. Co-founder **Nnamdi Okike** expects investors to be more cautious about capital-intensive, “spend at all costs” strategies associated with hyperscalers and foundation models. The firm lists [investment ranges](https://645ventures.com/industries/ai-infra-dev-tools?ref=therecursive.com) of $1 million to $5 million at seed and $5 million to $10 million at Series A. Its[ target ownership is 8% to 10%](https://645ventures.com/founder-paradigms?ref=therecursive.com). That model favors AI companies that can reach **meaningful milestones within conventional early-stage rounds**, rather than businesses whose development depends on multibillion-dollar financing.

The next challenge comes when an early bet succeeds. A smaller fund might have pro rata rights, but not the reserves for a much larger follow-on.[ Industry Ventures](https://www.industryventures.com/insight/small-funds-and-the-pro-rata-right?ref=therecursive.com) identifies deal-by-deal SPVs as one solution.[ Alpha Partners](https://alphapartners.com/for-vcs?ref=therecursive.com) provides $3 million to $15 million through such vehicles to **help early-stage investors fund later rounds**. This mechanism is not unique to AI, but becomes more valuable when an AI winner’s capital needs to rise sharply.

Each response starts with the same question: how much capital will this company need after the first check, and who will provide it?

## Smaller funds need to plan beyond the first check

As AI rounds grow, a company’s future capital needs become part of the seed decision. I have always viewed **fundraising as a means rather than a measure of progress**. An investor must judge a round by the result it buys. A large early round may be justified when an AI firm requires more computing power, scarce specialists, or physical infrastructure to compete. A company seeking funding to test retention, unit economics, or demand in a particular market may require less capital. In those cases, revenue, grants, debt, or strategic partnerships can sometimes finance part of that work without another equity round.

**What the capital is meant to finance changes the investment decision**. If the company is likely to outgrow the smaller fund’s reserves, the investor needs to assess whether the fund can assemble a syndicate, introduce later-stage capital, or accept dilution. A business that depends on multibillion-dollar follow-ons may simply require a different type of investor.

As an example,[ Zubr Capital led Placy’s €1 million pre-seed round](https://zubrcapital.com/news/real-estate-startup-placy-raises-euro1m-in-pre-seed-funding-from-zubr-capital?ref=therecursive.com). Its AI product was built to automate routine work for real estate agencies, including property valuations, market research, scheduling viewings, and drafting agreements. The relevant milestone is operational: can an agency handle more potential customers and transactions with the same-sized team?

## Changes at seed

AI mega-rounds are changing venture activity at the lower end of the market. Large multistage investors are moving into promising AI companies earlier, **bringing more capital and competition into the seed stage**.

Smaller funds are adapting. They are entering earlier, making more initial bets, screening companies for future capital needs, and bringing outside investors into follow-ons. For a smaller fund, the first check increasingly depends on what comes next: how much capital the company will need, when, and who can fund the next stage.