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Yahoo
2 days ago
- Business
- Yahoo
AI Continues to Fuel US VC Investment Despite Higher Burn Rates; Silicon Valley Bank Releases Latest State of the Markets Report
AI investments account for 58 cents of every VC dollar deployed in 2025 SAN FRANCISCO, Aug. 5, 2025 /PRNewswire/ -- While AI companies continue to attract significant venture capital (VC) investment, these companies are also operating with higher cash burn rates, according to the latest report from Silicon Valley Bank (SVB), a division of First Citizens Bank. AI companies account for approximately one-third (36%) of VC deals and the majority (58%) of total VC investments, but they are also showing higher burn rates and lower profit margins, according to the report. "AI is one of the most transformative innovations of the past two decades, driving strong potential across all sectors and industries. While increasing investment raises concerns about lofty valuations and high burn multiples, we remain optimistic that AI will help to push the innovation economy forward," said Marc Cadieux, President of Silicon Valley Bank, a division of First Citizens Bank, and co-author of the bi-annual State of the Markets Report. "Founders and CFOs are starting to focus more on balancing growth and profitability. After being in a constant state of flux since 2019, revenue growth rates and profitability in the tech sector have stabilized over the last four quarters." According to SVB, 75% of all venture-backed tech companies are growing revenue, with 63% of those either profitable or improving profitability. The percentage of profitable companies studied has more than doubled since 2022. "What you're seeing today is the start of the institutionalization of venture. The industry is kind of like Cro-Magnon on the evolutionary scale from ape to human," Ian Sigalow, co-founder and managing partner of Greycroft, stated in the report. "We're somewhere in the first third of evolution. We will become an industry that looks more like private equity given the number of companies and the global scale and ambition of these businesses." Leveraging proprietary data and research, SVB's bi-annual State of the Markets report provides an outlook on the innovation economy, focusing on venture capital (VC) trends, fundraising, the impact of AI, and the current state of the innovation economy market. Key Numbers – At a Glance Fundraising: Fundraising by venture funds in the US is on track to hit $56B this year, a 21% drop from 2024 and the lowest level since 2017. Mega-funds are dominating, leading to larger deal sizes, especially in AI. Among conventional VC fund capital raised in the US over the last three years, more than 36% went to funds at least a billion dollars in size—up from 20% for the period ending six years ago. AI Burn Rate: $5 is burned by the median Series A AI company to gain $1 of new revenue. Burn multiples for AI companies are higher than other sectors, suggesting low-cost capital could be fueling inefficient growth. IPOs: There were 10 US VC-backed tech IPOs in the first half of 2025. With the IPO window finally cracking open, it appears pent-up demand from investors could drive continued activity through the back half of the year. Investors: One-third of US VC investment came from deals with the six largest funds. The increase from 10% in the period ending in November 2024 was driven almost exclusively by massive AI deals Key Themes: Influence of Venture Podcasts: According to SVB's new Podcast Sentiment Index, the first-of-its-kind index drawing from 3,200 venture podcast episodes, AI and defense are high on the list of hot topics among VC firms. Key themes in podcasts also included improving sentiment of AI after ChatGPT was released and the momentum continues. Meanwhile, defense received a huge boost in mentions following the 2024 presidential elections. Unicorn KPIs: While 72% of tech unicorns are achieving YOY growth, only 21% are turning a profit. While growth can naturally slow as companies scale, 91% of non-growing unicorns are burning through their once-ample cash reserves. Geography of Innovation: New York has become a fintech standout, with nearly 30% of local VC dollars going to the sector in 2024 — more than double the national average. Austin dominates in consumer tech, and Denver received 54% more share of VC dollars than the national average for climate tech. Learn MoreTo access SVB's 2025 State of the Markets report please visit: State of the Markets Report | Silicon Valley Bank To share its deep industry knowledge, SVB develops various insights reports focused on sectors spanning the innovation economy. For the complete library of SVB's signature research reports, please visit Market Research Industry Trends & Insights | Silicon Valley Bank ( About Silicon Valley Bank Silicon Valley Bank (SVB), a division of First Citizens Bank, is the bank of some of the world's most innovative companies and investors. SVB provides commercial banking to companies in the technology, life science and healthcare, private equity and venture capital industries. SVB operates in centers of innovation throughout the United States, serving the unique needs of its dynamic clients with deep sector expertise, insights and connections. SVB's parent company, First Citizens BancShares, Inc. (NASDAQ: FCNCA), is a top 20 U.S. financial institution with more than $200 billion in assets. First Citizens Bank, Member FDIC. Learn more at View original content to download multimedia: SOURCE Silicon Valley Bank
Yahoo
2 days ago
- Business
- Yahoo
This Money Expert Says ‘Savers Are Losers' — Is He Right? Experts Weigh In
Robert Kiyosaki, finance expert and 'Rich Dad, Poor Dad' author, has been known for straight talk about the economy. In a recent tweet, he said, 'Savers are losers.' He pointed out that the U.S. Federal Reserve's way to avoid economic disaster is to print more money. He listed the 1987 market crash, the 1998 long-term capital management (LTCM) crash, the 2019 repo market seizure, the COVID-19 pandemic and the Silicon Valley Bank failure as examples. Read Next: Explore More: 'It's not a new crisis….it's the same crisis getting bigger,' he wrote. Then, he warned, 'Stop saving FAKE $. Start saving real gold, silver, Bitcoin. Protect your wealth. America is the biggest debtor nation in history… because of the FED. The Biggest Crash in history is coming….soon.' Also see 12 of Kiyosaki's best lessons for building wealth. Is Kiyosaki Right? By most economic markers, experts said we are not heading for a recession this year. 'As of now, the slight jump in inflation may be tied to tariffs, but there's nothing in the data suggesting an imminent recession,' said Stephan Shipe, Ph.D., CFA, CFP, a finance professor at Wake Forest University and founder of Scholar Financial Advising. Even so, inflation causes problems with saving, rather than investing. If your money in the bank is growing only at the national average of 0.38%, according to Federal Deposit Insurance Corporation statistics, but inflation is 2.7%, according to U.S. Bureau of Labor Statistics, you're losing money. A better choice would be a high-yield savings account delivering returns of around 3%, but even then, you're just barely keeping pace with inflation. 'Given the government's massive money printing today and foreseeable future, the fiat currencies are devalued consistently through time. The U.S. dollar's purchasing power is cut by half every 15 to 20 years,' explained CK Zheng, co-founder and chief information officer of ZX Squared Capital. Technically, savers are losers in that they could end up losing purchasing power over time due to inflation. But even so, finance experts like Suze Orman and Dave Ramsey recommend some funds in an easily accessible, liquid savings account for small emergencies like car or home appliance repairs. 'The truth of the matter is 75% of the people in the United States do not have at least $400 in savings for an emergency,' according to Orman in a recent GOBankingRates article. If you don't have any high-interest debt, according to the Ramsey Solutions blog, you should strive to save three to six months' worth of living expenses in an emergency savings account. Check Out: Should You Put Money Into Alternative Assets? Unlike savings accounts, which deliver paltry yields but are easily accessible in an emergency, the stock market has delivered yields of about 9% to 11% over the past 40 years, according to Carry. But if there's a crash, you could lose a good portion of your investment. That's why Kiyosaki recommended investing in alternative assets like bitcoin and ethereum. 'Crypto can bring some uncorrelated gains away from the traditional investments in equities and fixed income,' Zheng said. 'Today bitcoin is increasingly behaving like a 'digital gold' as the crypto is still in its early adoption phase.' He added that the passing of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act in late July 2025 helps give ethereum greater potential as an investment, too. 'Most of the stablecoins are built on the Ethereum platform,' he said. Noting that Kiyosaki is correct about fiat currencies depreciating, Zheng emphasized the importance of building an investment portfolio that reflects your age and risk tolerance. 'Smart investments in real assets including cryptocurrencies and equities are critical to build wealth,' Zheng said. 'Investors can dial up or down the crypto allocation based on their age and their risk appetite.' More From GOBankingRates 3 Luxury SUVs That Will Have Massive Price Drops in Summer 2025 6 Big Shakeups Coming to Social Security in 2025 10 Cars That Outlast the Average Vehicle This article originally appeared on This Money Expert Says 'Savers Are Losers' — Is He Right? Experts Weigh In
Mint
2 days ago
- Business
- Mint
Banks Piling Up at the Same Size Are Ripe for a Merger Wave
(Bloomberg Markets) -- For years, US regional banks have operated under a paradox. Like all companies, they need growth to survive and want to do so predictably. Every billion dollars in new assets directly pads the bottom line. But the post-2008 regulatory crackdown designed to make banking safer has also made the slow-growth strategy trickier. The moment a bank tiptoes across a key threshold like $100 billion or $250 billion in assets, more compliance costs kick in, potentially weighing on new revenue growth for years. Alternatively, banks can catapult past each regulatory asset threshold, typically through a merger or acquisition. A $90 billion bank joins forces with an $80 billion one, hopefully creating an institution that's big enough and profitable enough to justify the new costs. 'The basic premise is you'd rather leap across than crawl across,' says Gregory Lyons, a corporate partner specializing in financial institutions at the law firm Debevoise & Plimpton. 'You don't want to be the bank that has $250.1 billion. Because then you get all the regulatory burdens but not the scale.' Making the big jump hasn't been easy, though. The Biden administration's aggressive stance on bank regulations and the 2023 crisis around Silicon Valley Bank and others hindered mergers and acquisitions. Banks that announced deals often found themselves in limbo, waiting more than a year for sign-off from regulators. Interest-rate hikes quickly eroded banks' bond values and capital cushion, making M&A less feasible financially. Regional banks found themselves too big to sit still but too small not to worry about inching over the next regulatory hurdle. Now the change in the Oval Office is set to potentially break the logjam. Signaling a much friendlier stance on consolidation, regulators under President Donald Trump cleared the way in April for Capital One Financial Corp.'s blockbuster acquisition of Discover Financial Services. With other Biden-era merger guidelines expected to be rolled back—and the Federal Reserve indicating an openness to deregulation—banking analysts and investors are eyeing a major reshuffle. 'It's not going to be getting any better than this from a regulatory perspective,' Lyons says. Plot banks on a chart by their assets, and you'll spot what looks like a crowd milling around a closed airport gate, waiting for boarding announcements. Multiple US banks are now idling below key asset thresholds. As of the first quarter of this year, five regional banks are within $50 billion dollars of the $250 billion threshold. Another six regional banks sit just below a key $100 billion line. So what exactly determines these thresholds? Following Basel III, a global regulatory framework that was developed in the aftermath of the 2008 financial crisis, US banks are sorted into categories based on asset size. Whenever a bank grows past $100 billion, $250 billion or $700 billion, it graduates to a higher level of scrutiny as it's deemed more systemically important to the broader financial system. The challenges of upgrading technology, legal and accounting expertise, and balance sheet capacity to meet stricter capital and compliance requirements can take years to complete. Some estimates point to a 1% to 2% increase to a bank's annual expenses. Complicating matters, inflation has eroded the real value of the thresholds, making it easier for banks to hit each line. Gene Ludwig, a former chief banking regulator for the Clinton administration who's now an adviser and venture capital investor in financial services companies, says the current asset-based classifications are outdated. 'We can't expect banks to thrive under rules built for another era,' he says. 'When regulatory thresholds fail to reflect reality, banks are forced into a false choice: limit their ambitions or outgrow their regulatory category.' But indexing thresholds to inflation would bring other complications. Graham Steele, a former official at the US Department of the Treasury, says that a moving target would make planning deals more difficult. In practice, the thresholds aren't quite magic lines that change everything for a bank once they're crossed. Regulators, Ludwig notes, expect banks to prepare for these standards long before they officially cross the threshold. In a speech last year, Michael Barr, then-vice chair for supervision at the US Federal Reserve, noted that many of the risks at Silicon Valley Bank built up when it was still below the $100 billion threshold. He called for regulatory supervision of fast-growing banks to escalate 'on a gradual slope and not a cliff.' For banks, the real-world costs of early prep work for crossing a boundary can be enormous. Huntington Bancshares Inc. in Columbus, Ohio, started preparing for crossing the $250 billion line in 2022 when it had only $170 billion in assets. Chief Financial Officer Zach Wasserman says the effort has cost the bank an additional $50 million to $100 million in expenses each year and won't be completed until early next year. The bank had $210 billion in assets at the end of March. SunTrust Banks Inc. in Atlanta and BB&T Corp. in Winston-Salem, North Carolina, were the rare banks to cross the $250 billion line in recent years. They did so through a merger forming Truist Financial Corp. in Charlotte, North Carolina, with more than $500 billion in assets. Many other banks, including M&T Bank, Fifth Third Bancorp and Citizens Financial Group, have cruised steadily along below $250 billion for several years. Asset growth isn't the only option for improving profits, says Gerard Cassidy, co-head of global financials research at RBC Capital Markets—regional banks can also improve their mix of assets and reduce expenses. The delicate nature of approaching a regulatory threshold is best understood by looking at a bank that recently attempted it. In late 2021, U.S. Bancorp, a bank in Minneapolis with $559 billion in assets at the time, announced that it would acquire the core regional banking business of Union Bank from Mitsubishi UFJ Financial Group Inc. to expand in California. The ambitious acquisition would add approximately 1 million customers and $133 billion in assets, but it also landed the combined entity so close to the $700 billion threshold that U.S. Bancorp preemptively chose to comply with the next, stricter tier of rules. The timing proved difficult for U.S. Bancorp. Caught between expensive integration costs and the market pressure that came with rising interest rates, the bank decided to sell off assets, in part to avoid being bumped up into the stricter regulatory category. Now the bank, which got a new chief executive officer in April, is again the subject of investor speculation about a merger that would bring it well past $700 billion in assets. 'It's not on the table,' said CEO Gunjan Kedia in an interview with Bloomberg News in May. 'We take our medium-term goals very seriously, and M&A does not fit that promise to restore our valuation, to restore investor confidence.' The bank says it plans to stay under $700 billion until at least 2027. Regulatory changes may be coming. Michelle Bowman, the new vice chair for supervision at the Fed, appointed by Trump, has been a proponent of tailoring bank regulation to an institution's overall risk profile, not merely its raw asset size. Bank executives, who would benefit from greater flexibility, were vocal supporters of her nomination. Critics worry that more flexibility will mean more risk-taking. 'This whole approach really acts like regulators can in advance predict which banks are going to cause financial instability,' says former official Steele. Regulatory changes could cut both ways for M&A. Some banks might find it easier to merge, whereas others could decide it's less essential to do so. 'What used to look more like a cliff or a wall to get over is much smaller and may not even be that big a bright line at the end of the day,' First Horizon Corp. CEO Bryan Jordan said at an investor conference in June. His Memphis-headquartered regional bank, with about $80 billion in assets, is one of many now preparing to cross the $100 billion threshold in the next few years. The regulatory hurdles have contributed to the growing chasm between the super-regionals and the four largest banks: JPMorgan Chase, Bank of America, Citigroup and Wells Fargo. 'In the banking industry, Goliath is winning, and scale is making more of a difference than ever before,' says Mike Mayo, head of US large-cap bank research at Wells Fargo Securities. Since 2010, JPMorgan Chase & Co. has more than doubled its assets, from $2 trillion to about $4.5 trillion. Its nearest rival, Bank of America Corp., now holds almost $3.5 trillion in assets. Next in size comes Citigroup Inc., followed by Wells Fargo & Co. at just under $2 trillion. And then, leaving aside investment banks Goldman Sachs Group Inc. and Morgan Stanley, it's a big drop to U.S. Bancorp. 'We have a handful of extremely large banks and we essentially hamper the ability of the super-regionals to compete with them,' says Randal Quarles, a former Federal Reserve official. 'I think it would be a better system if you had a more continuous range of size.' The last time a true banking giant was formed was 2008, when Wells Fargo crossed the $1 trillion asset mark by acquiring beleaguered Wachovia Corp. 'Three decades ago, if you asked me if this was the way I thought it would play out, I would say absolutely not,' Mayo says. 'JPMorgan should have more trillion-dollar bank competitors, and as long as they don't, I'm going to keep increasing my price targets and probably my earnings estimates.' —With assistance from Mark Glassman Wang covers regional banks for Bloomberg News, and Li is a data reporter. They are both in New York. More stories like this are available on
Wall Street Journal
31-07-2025
- Business
- Wall Street Journal
Venture Interest Slackens in Once-Hot Biotech
Relentless market uncertainty and narrowing opportunities to take startups public are leading venture capitalists to take a step back from biotechnology. U.S. and European biotechs raised $11.2 billion in venture capital in the first half, according to Silicon Valley Bank. That is off last year's pace, when these startups collected $28.6 billion for the full year.
Yahoo
30-07-2025
- Business
- Yahoo
Health tech investment bolstered by AI in H1: report
This story was originally published on Healthcare Dive. To receive daily news and insights, subscribe to our free daily Healthcare Dive newsletter. Dive Brief: Venture capital investment across the healthcare sector slowed in the first half of the year, but health tech funding was a bright spot — buoyed by growing interest in artificial intelligence, according to a report published Tuesday by Silicon Valley Bank. Overall healthcare investment and deal count declined, but health tech startups in the U.S. and Europe raised $8.2 billion across 358 deals, the best first half recorded in the segment since early 2022. The performance was driven by a boost in funding for companies using AI, especially for administrative and back-office use cases. 'From a VC perspective, these business models can be very sustainable, and there is a clear path to profitability,' said Jackie Spencer, head of relationship management for life science and healthcare banking at SVB. Dive Insight: Overall, the first half of 2025 was a challenge for healthcare fundraising. Funds in the sector are on track for the lowest capital closed in more than 10 years, according to SVB. Healthcare companies — which include biopharma, health tech, medical device, and diagnostics and tools startups — are lagging this year. Firms in the U.S. and Europe scooped up $26.7 billion across 1,318 deals in the first half this year, compared with around $29 billion in more than 1,400 deals last year. One challenge for investment and fundraising this year is macroeconomic uncertainty — including trends that have carried over from last year, Spencer said. 'In 2024, we talked so much about the interest rate environment and the uncertainty around inflation and international conflicts as being a reason for a lot of the pullback in fundraising and investment,' she said. 'Those things still exist, right? Interest rates are still high.' Plus, there are new economic questions for investors and startups. Tariffs could be a significant financial hit for companies that source components outside the U.S., while cuts to National Institutes of Health funds could hinder innovation down the road, according to SVB. The health tech segment is facing its own uncertainties too, from the impact of cuts to Medicaid in the recently passed tax and policy law to medical cost increases in Medicare Advantage — a concern as payers in the privatized Medicare program drive tech adoption to attract enrollees and keep expenses down, according to the report. However, health tech has performed well so far this year: The segment made up about one-third of overall healthcare investment, its largest proportion since 2021, according to SVB. Just over 60% of health tech funding is linked to companies that use some form of AI, Spencer said. Back-office use cases for AI have become a large focus for investment. Tools aimed at lessening administrative work rather than clinical tasks made up 44% of AI funding in the first half of the year, according to SVB. 'There's an obvious use case for it, and there's a clear cost savings that can be shown to ultimately the buyers of the technology,' she said. 'Not to mention, the back office in healthcare is very, very convoluted, very archaic. It's ripe for disruption.' Health tech has also seen two initial public offerings this year — virtual musculoskeletal firm Hinge Health and chronic care management company Omada Health — after a long dry spell in digital health IPOs. Still, the IPO market will likely continue to be 'highly selective,' Spencer said. Health tech companies that went public over the past decade that performed poorly are still weighing down the sector's performance, and they could be holding back newer firms, according to the report. For other exits, health tech has already notched several high-dollar mergers and acquisitions this year, with almost as much spent on private M&A so far in 2025 as the past three years combined. Non-traditional buyers, like venture-backed companies with available cash, are one avenue for M&A, Spencer said. For example, Waystar, a healthcare payments firm that went public in 2024, recently signed a definitive agreement to buy AI-backed revenue cycle management company Iodine Software. Plus, private equity firms are still actively buying and rolling up point solutions, Spencer added. 'I anticipate M&A to be a bit rosier of a story,' she said, 'just because there are multiple buyers and there is still a lot of capital out in the market.' Recommended Reading AI startups boost digital health funding in H1: Rock Health Sign in to access your portfolio
