Artificial Intelligence (AI) continues to dominate global investment flows in 2025 as venture capitalists have poured 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 one sector.
The report shows that the majority of the capital has gone to established players such as Anthropic and xAI, both of which raised multi-billion-dollar rounds this quarter.
However, early-stage startups and those outside the AI space are struggling to raise capital as investors concentrate their resources on proven AI firms, Bloomberg first 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 dedicated 62.7% of total investments this year to AI-focused companies, while global investors allocated 53.2%. In total, venture deals globally have reached $366.8 billion so far in 2025, with the U.S. accounting for $250.2 billion.
The investment trend underscores how central AI technologies have become to the global innovation economy. From large language models to robotics and automation tools, investors are betting heavily on AI’s ability to transform industries including healthcare, manufacturing, and finance.
However, the report also highlights a broader slowdown in the global venture capital landscape. The total number of companies securing VC funding in 2025 is projected to be the lowest in several years. Likewise, only 823 venture funds have raised about $80 billion globally this year, a sharp decline from 4,430 funds that raised $412 billion in 2022.
This drop reflects growing investor caution amid a subdued IPO market and limited merger and acquisition activity. With fewer exit opportunities available, VCs are focusing their bets 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 added. “And they’re focusing it on AI.”
The trend is visible across regions, from Silicon Valley to Asia’s tech hubs. AI robotics, automation, and software companies are drawing increasing attention as firms rush 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 the current capital inflows. Analysts note that even if a correction occurs, AI will likely retain its position as a core focus of venture funding due to its broad industrial applications.