Darren Herft believes one force is now bending the direction of global investment more than any other and that is, artificial intelligence. Across the world’s biggest pools of capital in 2025, investors poured money into AI faster than into anything else, and that pull is changing how money moves through the entire market.
Darren Herft, who studies how capital flows through technology and business, sees this as the defining feature of the current moment. Investment has recovered strongly, but the recovery is narrow. A small number of AI-focused companies are drawing an outsized share of the money, while everything else waits in line.
A Recovery That Is Real but Narrow
Global venture funding reached around $425 billion in 2025, and the final quarter was the strongest in years. On the surface, that looks like a broad return of confidence. But Darren Herft points to what sits underneath the headline. Just five companies captured roughly $84 billion of that total, and AI alone absorbed about half of all venture dollars. A recovery where a handful of companies take a fifth of the money is not a wide one. Capital is available, but it is crowding into a small group of perceived winners while the long list of other businesses is left waiting.
This is the risk Darren Herft keeps returning to. When money concentrates this tightly, prices in the favored corner can climb too fast, and investors can mistake a few large deals for a healthy market overall.
The Pressure Building in Private Equity
This concentration is also reshaping private equity. Right now, that selling has stalled. Firms are holding an enormous amount of money they have not yet deployed, while also struggling to sell the companies they already own.
Darren Herft explains why this matters. When firms cannot sell, investors do not get their money back. That makes those investors slower to commit to new funds, which eventually slows the whole system. The easy gains of the cheap-money era are gone, and firms can no longer rely on rising valuations and low-cost debt to produce returns.
So the job has changed. Firms now have to create real value by improving how their companies actually operate, rather than depending on financial maneuvering. The firms that master this can still earn strong returns in a harder market. The firms that cannot will struggle to raise their next fund, because investors are watching results more closely than ever.
How a Disciplined Investor Reads This Market
To make this concrete, consider the position a serious investor faces. Money is returning, but it is heavily concentrated in AI, and a few very large deals can make the market look healthier than it is. The temptation is to chase the crowd.
Darren Herft‘s approach is to ask sharper questions instead. How is a fund actually creating value, through real operational improvement or through financial engineering? How long is it holding its companies, and how does it plan to return money to investors? And how exposed is it to the crowded AI trade compared with the many promising businesses that attract less attention? An investor who asks these questions can take part in the recovery without overpaying for hype or backing a company whose only strength is the AI label.
The Long-Term Trend Still Points Up
Darren Herft is careful to separate the short-term strain from the long-term direction. The current difficulty in selling companies is a real and serious problem. But the broader trend has not reversed. Private equity as a whole continues to grow, and several segments are expanding quickly.
The lesson he draws is about perspective. Markets move in cycles, and this is a difficult point in one. Yet the long-run direction of the asset class is still upward. The investors who do best are those who can hold both ideas at once, that is, respect the cycle, but trust the trend.
What This Means for Investors
For investors of all kinds, including individuals now gaining access to private markets, the message is consistent. Look past the excitement and focus on the fundamentals. The strongest returns now come from genuine value creation.
That means favoring managers who improve the real performance of their companies, who have a clear plan for returning money, and who are not simply riding the AI wave alongside everyone else. In a market this concentrated, discipline is the advantage.
Conclusion
The story of global investment in 2025 and 2026 is a story about AI’s pull and the narrow recovery it has created. Capital is plentiful, but it is crowding into a small group of favored companies while trillions of dollars sit waiting on both sides of the market.
Darren Herft‘s view matters because he holds the cycle and the trend in the same frame. The firms and investors who thrive will be those who shift from financial engineering to real value creation and who stay disciplined when the crowd is not. For anyone trying to understand how money is moving through a moment this unusual, his perspective keeps both the opportunity and the risk in clear view.
FAQs
Why is AI attracting so much investment right now?
ANS: Investors see AI as the technology most likely to drive the next decade of growth. In 2025, it absorbed about half of all venture funding, making it the single largest force concentrating capital across global markets.
What is private equity?
ANS: Private equity is investment in companies that are not publicly traded. Firms raise money from investors, buy companies, work to improve them, and aim to sell them later at a profit.
How does private equity differ from venture capital?
ANS: Venture capital usually funds young, high-growth startups in exchange for minority stakes, accepting that many will fail. Private equity tends to buy more mature companies, often taking control and driving returns through operational improvement.
How do investors get their money back from these funds?
ANS: Returns come when companies are sold, through public listings, sales to other companies, or sales to other investors. When selling slows, payouts to investors slow as well, which is the core challenge the market is facing now.
What separates strong investment managers in this environment?
ANS: Increasingly, it is the ability to create real value by improving how their companies operate, rather than relying on cheap debt or rising valuations. Investors now look closely at how managers actually generate returns and return capital.
