Artificial Intelligence (AI) continues to dominate global investment flows in 2025, with venture capitalists pouring a record $192.7 billion into AI startups so far this year, according to data from PitchBook.
This milestone makes 2025 the first year in which more than half of global VC funding has gone into a single sector.
The report shows that most of the capital has been directed to established players such as Anthropic and xAI, both of which raised multi-billion-dollar rounds this quarter. Meanwhile, early-stage startups and companies outside the AI space are struggling to raise funds as investors concentrate resources on proven firms, Bloomberg reported.
“Everywhere we look, the market is bifurcated,” said Kyle Sanford, PitchBook’s Director of Research. “You’re in AI, or you’re not. You’re a big firm, or you’re not.”
According to PitchBook, U.S. venture capitalists have dedicated 62.7% of total investments this year to AI-focused companies, while global investors allocated 53.2%. Overall, global venture deals have reached $366.8 billion so far in 2025, with the U.S. accounting for $250.2 billion.
The trend underscores how central AI technologies have become to the global innovation economy. From large language models to robotics and automation, investors are betting heavily on AI’s ability to transform industries such as healthcare, manufacturing, and finance.
However, the surge in AI funding comes amid a broader slowdown in the venture capital landscape. The total number of companies securing VC funding in 2025 is projected to be the lowest in several years. Only 823 venture funds have raised about $80 billion globally this year — a steep decline from 4,430 funds that raised $412 billion in 2022.
This drop reflects growing investor caution in the face of a subdued IPO market and limited merger and acquisition activity. With fewer exit opportunities, venture capitalists are focusing on companies that can demonstrate near-term commercial viability, particularly those applying AI to real-world problems.
“Backers of venture funds are being more deliberate about where they’re putting their money,” Sanford said. “And they’re focusing it on AI.”
The shift is evident across regions, from Silicon Valley to Asia’s tech hubs. AI robotics, automation, and software companies are attracting increasing attention as firms race to build scalable business models around generative AI and automation technologies.
Despite concerns about potential overvaluation, investors remain optimistic that AI’s long-term growth potential will justify current capital inflows. Analysts note that even if a market correction occurs, AI will likely remain a core focus of venture funding due to its broad industrial applications.
