Record-Breaking AI Funding Drives Market Frenzy
AI startups in the U.S. attracted a staggering $104.3 billion in venture funding in the first half of 2025, nearly matching the entire 2024 total, according to PitchBook data. That figure now represents almost two-thirds of all U.S. venture funding—up significantly from 49% in 2024.
The largest deals continue to be dominated by a few big players. Notable among them:
- OpenAI secured a record-setting $40 billion round in March, led by SoftBank.
- Meta invested $14.3 billion into Scale AI, part of a strategic move that involved bringing on board CEO Alexandr Wang and key team members.
- Anthropic, OpenAI's closest rival, raised $3.5 billion in another major round.
- Safe Superintelligence, a startup launched by OpenAI co-founder Ilya Sutskever, drew $2 billion in early funding.
These deals are pushing AI valuations into uncharted territory, but they’re not yet translating into widespread exits for early-stage investors.
Exit Landscape: Active, but Small-Scale
Despite the surge in funding, venture-backed AI exits totaled just $36 billion in the first half of the year—roughly one-third the amount invested.
There were 281 VC-backed exits, according to PitchBook, but the majority were modest acquisitions or low-profile IPOs. High-value liquidity events remain rare. Notable exits include:
- The $700 million acquisition of EvolutionIQ, an AI platform for insurance claims, by CCC Intelligent Solutions.
- The IPO of Slide Insurance, an AI-powered home insurance startup, valued at $2.3 billion.
The exception came from CoreWeave, an AI infrastructure company whose IPO at the end of Q1 saw its stock price jump 340% in Q2, lifting its valuation to over $63 billion. This underscores the ongoing investor enthusiasm for core AI infrastructure, even as application-layer startups see smaller returns.
Acquisitions Dominate, IPOs Languish
According to Dimitri Zabelin, senior research analyst at PitchBook, the current trend in AI exits is defined by frequent, lower-value acquisitions, rather than blockbuster IPOs. This is largely due to macroeconomic headwinds, tight liquidity conditions, and cautious public markets.
Many of these exits take the form of "bolt-on" deals—acquisitions where established tech firms absorb AI startups to improve their own future valuations or enhance their product capabilities ahead of a larger sale or public offering.
“Vertical solutions tend to plug more easily into existing enterprise gaps,” Zabelin explains, noting that sector-specific AI applications remain in strong demand even as investors wait for more favorable exit conditions.
Outside AI, the VC Picture Is Bleak
While AI continues to drive VC interest, funding in other sectors is sharply down. U.S. fintech funding dropped 42% in H1 2025 to $10.5 billion, according to Tracxn, with similar slowdowns in cloud software and crypto.
This growing concentration of capital in AI reinforces the industry's perceived long-term value—but also amplifies the pressure on AI companies to deliver meaningful returns to investors.
Outlook: IPO Window Hinges on Macroeconomic Shifts
There is cautious optimism that the IPO pipeline could reopen if interest rates fall and economic conditions stabilize. Investors are clearly eager to back promising AI ventures, particularly those building vertical applications that solve real-world problems in areas like healthcare, logistics, and financial services.
“The appetite for AI, specifically vertical applications, will continue to remain robust,” Zabelin said, emphasizing that demand is not the problem—exit timing is.
Until the IPO market rebounds, the pattern of record-breaking fundraising without corresponding exits is likely to persist, leaving many venture firms flush with paper gains, but still waiting for the real payout.