From the start of this year, artificial intelligence (AI) startups have been a magnet for venture capital, drawing in an unprecedented $192.7 billion. It's anticipated that 2025 will mark the inaugural year where more than half of all venture capital is funneled into the AI realm. A significant portion of these funds has been directed towards well - established startups. For instance, in this quarter alone, Anthropic and xAI have each secured over $10 billion in funding. On the flip side, relatively obscure new startups, particularly those not centered around AI, are facing an uphill battle.

The increasingly stringent Initial Public Offering (IPO) and Merger & Acquisition (M&A) landscape has made some venture capital firms wary of investing in companies that haven't undergone market testing. In the latest quarter, a remarkable 62.7% of venture capital investments in the United States, and 53.2% on a global scale, were channeled into AI companies. This year, the total global venture capital amounted to $366.8 billion, with the U.S. accounting for $250.2 billion of that sum.

Although a select few AI companies have managed to secure substantial funding rounds, the overall financing scenario for startups is rather grim. In 2025, it's projected that both the number of venture - backed companies and the number of venture capital firms raising new funds will plummet to the lowest levels seen in recent years.