AI Dominates VC Funding in 2025 as Non-AI Startups Struggle to Raise Money Amid Market Bifurcation

New data from PitchBook reveals a stark shift in the venture capital landscape, highlighting how AI has become the dominant force in startup funding, with 2025 on track to be the first year when AI startups receive more than half of all venture capital investment. So far this year, VCs have committed $192.7 billion to AI-related ventures out of a total $366.8 billion in global funding, according to Bloomberg. In the most recent quarter, AI startups captured 62.7% of all U.S. venture capital and 53.2% of global VC funding. This surge is largely driven by massive rounds from well-known AI firms—most notably Anthropic, which closed a $13 billion Series F round in September, one of the largest in tech history. Meanwhile, the broader startup ecosystem is facing a sharp contraction. PitchBook reports that only 823 venture funds have been raised globally so far in 2025, a dramatic drop from the 4,430 funds launched in 2022. This decline reflects a market increasingly focused on a narrow set of high-potential AI players, leaving non-AI startups struggling to attract investment. Kyle Sanford, PitchBook’s director of research, described the current environment as “bifurcated,” where the market is sharply divided between AI and non-AI ventures. “You’re in AI, or you’re not,” he said. “And if you’re not, you’re likely not getting funded—especially if you’re not a big firm with a proven track record.” The trend underscores a growing concentration of capital and attention on AI, as investors bet heavily on companies building foundational models, infrastructure, and applications for generative AI. For startups outside this space, securing funding has become increasingly difficult, with many traditional sectors—like fintech, health tech, and consumer apps—finding it harder to compete for attention and capital in a market now defined by AI’s explosive growth.