The State of Al Venture Capital in 2025: Al Boom slows with fewer Startups but bigger Bets

Venture capital funding in artificial intelligence has surged over the past decade, transforming the landscape of startup investing.

- June 10, 2025. Paul Hoffman.

Back in 2015, Al accounted for just 8.6 percent of global VC deal activity. By the first quarter of 2025, that share had jumped to 27.8 percent, representing 57.9 percent of all venture capital raised. Yet despite this explosive growth, recent data suggests investor enthusiasm may be cooling.

The team at BestBrokers analysed VC activity in artificial intelligence and machine learning startups using data from PitchBook, CB Insights, and LIQUIDITY. With the global Al market predicted to reach USD 4.8 trillion by 2033, the sector still commands massive attention, highlighted by OpenAl's record-setting USD 40 billion private funding round. However, the number of VC-backed Al deals dropped to a five-year low in Q1 2025, with only 2,101 completed funding rounds, down from 2,516 in Q1 2024 and 3,022 in Q1 2022. This signals a potential turning point in the current Al investment boom.

In January, Deepseek, a barely two-year-old Chinese Al startup, nearly burst the Al bubble when it revealed its model, which was reportedly just as good as OpenAI's ChatGPT but at a fraction of the cost. This claim shook the markets and urged investors to rethink the billions of dollars poured into expensive, resource-intensive and energy-hungry projects. More recently, London-based Al startup Builder.ai filed for insolvency following months of financial issues. Shockingly, the company, which was backed by Microsoft and Qatar's sovereign wealth fund, was accused of using Indian coders who manually worked behind the screens, posing as AI tools.