Artificial Intelligence companies continued to post strong valuation premiums at Series A, particularly in sectors like Industrials, Healthcare, Financials, and Tech. But dig deeper, and a new picture emerges: AI’s share of total funding is slipping across most stages in the first half of the year, even as mega-deals keep Series D+ capital allocation above 75% for AI startups.
In short, investors still believe in AI, but there are signs that they’re getting picky. With fewer dollars to go around, especially at the late stage, we believe capital is concentrating around AI startups with defensible IP, real-world traction, and efficient go-to-market strategies.
This aligns with the broader theme of investor selectivity, specifically in later stage companies. Q2 continued the trend we observed in Q1, which makes us even more interested in seeing what Q3 will show.
Key Takeaway: The bar is getting higher for AI startups in 2025. Valuation premiums are still there, but founders need to articulate why their product is differentiated and how it will scale.
Get the full picture and read the full Venture Beacon Q2 2025 report.
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