Artificial intelligence continues to dominate the business world with investors pouring tens of billions of dollars into promising AI startups, data centres and other critical infrastructure. With leading companies such as NVIDIA and OpenAI still growing and governments committing billions to new massive projects, the AI battle continues to heat up.
As U.S. President Donald J. Trump promised $92 billion in funding for AI, the sector is set to draw in even more colossal investment in the near future, both private and public. Venture capital firms have been particularly infatuated with AI, spending billions on startups such as Scale AI, Anthropic, and Safe Superintelligence. But where is all this spending going? The team at BestBrokers analysed venture capital activity in artificial intelligence and machine learning startups using data from PitchBook, CB Insights, and LIQUiDITY.
We found out that AI startups have raised $122 billion since the start of the year, of which US deals alone account for $104.3 billion (85.5%). Throughout the second quarter of 2025, there were 2,146 deals completed, roughly on par with Q1. Total investment value has fallen significantly from its peak of $73.1 billion last quarter to $50 billion, though it remains historically high compared to previous years.
Key takeaways:
- Venture capital investment in AI reached $50 billion this quarter, accounting for nearly half of the total $101.5 billion invested by VC firms.
- Deal count continues to decline, with only 7,272 confirmed VC deals this quarter, the lowest number since Q3 2017, when just 7,264 deals were recorded.
- Year-on-year quarterly AI funding has increased by 7.28% since 2023 and 9.26% since 2024, representing a total growth of 17.22% over two years.
- AI investments in 2025 have reached nearly $122 billion thus far, marking a record high for Q1 and Q2 combined, surpassing any previous year’s first half.
- The largest funding round this quarter was Meta’s $14.3 billion investment in Scale AI.
Following the AI investment boom of 2021-2023, VC firms have entered a more selective phase, focusing on AI companies with established enterprise applications or those building infrastructure and cloud-based technologies. Some examples include Meta’s $14.3 billion investment in Scale AI and Thinking Machines Lab’s $2-billion seed round. Quarterly year-on-year data over the past five years shows that VC deal volume has dropped by nearly 46% from its peak in 2021-2022, when 13,570 deals were recorded in a single quarter, to just 7,272 in Q2 2025.
Despite the overall slowdown, the number of AI-related deals has remained relatively stable over the years. In Q2 2020, investments in machine learning and artificial intelligence startups accounted for 18.7% of all VC deals (1,712 out of 9,134), rising to 29.5% in Q2 2025 (2,146 out of 7,272). This shift highlights the growing focus on AI within the venture capital landscape, even as total deal activity has declined.
Venture Capital in 2025: Investing More But Less Frequently
While Q2 2025 experienced a sharp decline in VC deal volume, large-scale investments in data centres and AI infrastructure, such as Trump’s $92 billion AI and energy package, are poised to shift the trend in the coming quarters. The market is shifting towards infrastructure-heavy AI opportunities that demand larger investments. What we are witnessing is not a collapse in venture capital interest, but the long-term development of AI’s foundational backbone.
The private sector is also playing a key role in funding AI infrastructure, with prominent VCs and corporate venture arms, such as Scale Venture Partners, Infravia Capital Partners, and Comcast Ventures, committing significant capital to AI and cloud infrastructure projects. These investments are essential for enabling newly founded AI startups to scale, and are expected to help revitalise overall venture capital activity over time.
Venture capital funding fell to $101.5 billion in Q2 2025, down from a record $128.4 billion in Q1. Nevertheless, investment levels remain strong despite ongoing economic uncertainty and global instability. A key factor behind the slowdown is the persistent IPO drought: without public market exits, venture capital firms are constrained in their ability to raise fresh funds, particularly as delayed flotations continue to drag on year after year.
Major AI startups such as Databricks and OpenAI are opting to remain private, buoyed by late-stage funding and active secondary markets. Investors remain cautious following lacklustre IPO performances from companies like Rivian and Bumble in 2021–2022. This hesitancy is significantly restricting liquidity and slowing the pace of new venture capital deals.
During Q2 2025, venture capital funding for AI accounted for 49.2% of the total VC deal value, with $50 billion out of $101.5 billion invested in AI startups. By comparison, in Q2 2020, AI deals represented just 21% of total VC investment value, amounting to $16.7 billion out of $79 billion. Meanwhile, the rest of the startup ecosystem is shrinking rapidly. As AI attracts more capital, sectors such as e-commerce and healthtech are experiencing a significant investment drought. In Q2 2025, non-AI investments fell to their lowest level in over seven years with VC firms investing only $41.8 billion in non-AI startups. What was once a niche industry has now become a dominant part of venture capital spending.
A significant share of this year’s venture capital funding has flowed into a small group of leading AI firms. Startups such as OpenAI, Anthropic, Scale AI, and Infinite Reality have each secured multi-billion-dollar rounds in 2025 alone, contributing to an increasingly uneven funding landscape. For smaller AI startups, this concentration of capital has made fundraising considerably more difficult, as venture firms are growing more inclined to back safer bets in today’s strained economy.
The Biggest VC Deals So Far in 2025
The largest AI investment for the quarter, and the second biggest of 2025, was Meta’s $14.3 billion stake in data labelling and model evaluation startup Scale AI. The deal also gave Meta founder and CEO Mark Zuckerberg a 49% stake in the company. Another notable funding round was Anduril’s recent $2.5 billion investment led by Peter Thiel’s Founders Fund which more than doubled the company’s valuation, from $14 billion to $30.5 billion.
Safe Superintelligence, an AI company founded by former OpenAI chief scientist Ilya Sutskever, has secured $2 billion in a funding round led by Greenoaks, Alphabet, and Andreessen Horowitz. Earlier this year, leading AI researcher Yoshua Bengio warned that advanced models are showing increasingly unpredictable and deceptive behaviour, prompting renewed calls for stronger oversight and regulation. The surge in funding for firms like Safe Superintelligence underscores the industry’s growing focus not only on technological advancement, but also on the responsible and aligned development of AI to address emerging risks.
In the first quarter of 2025, SoftBank set a new record by investing $40 billion in OpenAI. Just months later, another milestone was reached when Thinking Machines Lab secured the largest-ever seed-stage funding round of $2 billion. Led by Andreessen Horowitz and Greenoaks, this round valued Thinking Machines Lab at $10 billion, despite the company not yet having launched a product. Typically, seed funding rounds rarely exceed $10 million, with the previous record held by Safe Superintelligence in 2024, which raised $1 billion.
The Venture Capital Firms behind the AI Investment Boom
SoftBank Group Corp has been investing heavily in AI in recent years, primarily through its tech and AI investment vehicles, Vision Fund 1 and Vision Fund 2. The company’s combined assets under management (AUM) across all funds total approximately $166 billion, making SoftBank Group the largest single tech-focused investment entity. It recently signed a $40 billion deal with OpenAI in the largest private tech investment in history.
In December 2024, SoftBank Group CEO Masayoshi Son announced that the company would invest $100 billion in AI infrastructure. The project was officially presented in January by U.S. President Donald Trump, just hours after his inauguration, at a press conference at the White House alongside Masayoshi Son, OpenAI’s Sam Altman and Oracle’s Larry Ellison. The initiative, called the Stargate Project, is said to bring a $500-billion investment in the U.S. AI industry.
Andreessen Horowitz, also known as a16z, is an American VC firm founded in 2009. As of 2025, it manages $74.7 billion in assets and is a major investor in the tech sector. In April 2025, Andreessen Horowitz co-funded Anysphere, the maker of Cursor, in a $900 million Series C round alongside Thrive Capital and Accel. A16z has also invested in medical AI, including a $300 million deal with Abridge, a clinical conversations AI startup, and an $8.2 million funding round for Scribenote, an AI-powered veterinary scribe platform.
Tiger Global Management, formerly known as Tiger Technology, is a U.S.-based VC firm established in 2001. It currently manages $69.6 billion in assets, ranking as the third-largest venture firm globally by AUM. In 2021, Tiger Global co-led a $300 million fundraising round with D1 Capital for U.S. AI startup Groq, pushing its valuation past $1 billion and granting the company unicorn status. More recently, Tiger Global invested $100 million in EnCharge AI, an emerging AI chip developer.
Sequoia Capital has maintained a strong focus on technology investments since its founding in 1972. Its AI investment portfolio spans consumer tech, entertainment, industrial, health, and defence sectors. As of 2025, Sequoia manages $60.5 billion in assets, with 2,809 total investments and 867 active portfolio companies. In late 2024, the firm co-invested $6 billion in Elon Musk’s xAI during its Series C round. The deal was made in collaboration with a16z, BlackRock, Fidelity Management & Research Company, Kingdom Holding, and Lightspeed, among others.
Lightspeed Venture Partners specialises in growth, seed, and early-stage tech investments. As of the latest data, the firm manages $31.2 billion in assets globally. Earlier this year, it led a $3.5 billion Series E funding round for Anthropic, valuing the company at $61.5 billion. Alongside Sapphire Ventures and WestBridge Capital, Lightspeed also invested over $102 million in Yellow AI a U.S.-based customer service automation startup. The funding spanned three rounds and pushed Yellow AI’s valuation to over $500 million.
Methodology
To prepare this report, the team at BestBrokers used the most recent available data on global VC firm activity from Pitchbook and from business analytics platform CB Insights and various VC investors’ websites. We also looked at additional information from a handful of other sources, such as LIQUiDITY and DealRoom.
We collected revenue and asset data for the U.S.-based VC firms from the U.S. Securities and Exchange Commission (SEC) database. Investment Advisor information is publicly available on the IAPD website, where we checked the ADV forms firms filed. For international VC firms, we analysed their most recent press releases and annual financial reports.