US AI startups see funding surge while more VC funds struggle to raise, data shows
That previous surge came during the era of the Zero Interest Rate Policy (ZIRP), when central banks slashed rates to stimulate economic activity during the COVID-19 pandemic, sending capital into higher-risk assets including venture capital. This year's boom has been driven largely by major AI investments and bold bets from big tech companies, a wave of activity set off by the debut of ChatGPT in late 2022. In the past three months alone, $69.9 billion was invested in U.S. startups. Standout deals included OpenAI's $40 billion round and Meta's $14.3 billion purchase of a stake in Scale AI. Other AI deals exceeding $1 billion in the second quarter included significant investments in Safe Superintelligence, Thinking Machine Labs, Anduril, and Grammarly. These deals underscore sustained investor conviction in the AI sector, which accounted for 64.1% of the total deal value and 35.6% of the deal count in the first half of the year. "I think it's downstream of the fact that OpenAI and Anthropic continue to grow at unbelievable rates," said Davis Treybig, partner at VC firm Innovation Endeavors. "If there's even a chance you could see that sort of progress in other domains, whether it's robotics, protein folding models, world models or video models, then there's a lot of people who are going to want to invest a lot of money."
Harder for VC funds
In contrast, U.S. venture capital fundraising continued to face headwinds, with just $26.6 billion raised across 238 funds in the first half of the year. This subdued environment represents a 33.7% year-over-year decline in capital raised, extending the downward trend from 2024. It is also taking fund managers longer to close new vehicles, with the median time stretching to 15.3 months by the second quarter of 2025 - the longest in over a decade, data shows. The disconnection from the startup market reflects concerns from limited partners on the asset class due to recent underperformance and liquidity constraints. A rebound in exit activity, including IPOs and M&A, has brought a sense of optimism for the remainder of the year. Exit activity in the second quarter was up 40% from last year, as a loosening antitrust environment and a thawing IPO market boost confidence. Sectors aligned with President Donald Trump's priorities such as AI, national security, defense technology, fintech and crypto dominated IPO interest in the second quarter, the report noted. "The good news is we're starting to see the tide turn," said Lucas Swisher, co-head of growth investing at tech investment firm Coatue. "IPOs like Coatue portfolio companies Hinge Health and Coreweave have been well received by the market, and there are a dozen companies filed now." Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. As deposit ground slips under PSU banks' feet, they chase the wealthy
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