Menlo Ventures’ Matt Murphy on AI’s ‘Rare Land-Grab Moment’

Menlo Ventures announced $3 billion in new capital across two funds in June, the largest raise in its 50-year history. Menlo Ventures XVII is focused primarily on seed and Series A companies, while Menlo Inflection IV provides growth capital for startups at Series B and beyond. The funds target AI companies across foundational models, infrastructure, enterprise, healthcare and consumer applications.

Murphy told Crunchbase News that AI companies need more capital than previous generations of software companies, are staying private longer and can separate from the pack faster. Menlo’s larger fund structure is designed to support founders from company formation through hypergrowth. The firm has used that approach with companies including Anthropic, Suno, Wispr, OpenRouter and Lovable.

Anthropic has become the most prominent company in Menlo’s AI portfolio, with the firm first investing in the AI model developer in 2023 and adding to its position in later rounds. Murphy said the market is moving from a first phase, where developers selected a model and started building, to a second phase focused on scale, spend optimization and infrastructure choices. He expects a multi-model world, with opportunities around companies such as OpenRouter, Fireworks, Modal, Gimlet, Chai Discovery and Skild.

Murphy identified a key bottleneck around getting newly written code into production faster, safely and securely. That creates tailwinds for software delivery, application security, code security, code review and testing companies, including Harness, Semgrep and Greptile. He also pointed to demand for compute, training, sandboxes and runtime resources as companies build custom models based on open-source or open-weight models.

Murphy said many AI categories are overfunded and speculative, even as the strongest companies may compound at unprecedented rates. Menlo is active across models, infrastructure and applications, with infrastructure currently seeing a disproportionate spike in opportunities as companies adopt multi-model strategies. His framing of AI as a “rare land-grab moment” underscores the urgency, but also the need to separate durable businesses from hype.