US AI Startups Attract Record Funding in H1 2025, Even as VC Firms Struggle to Raise Capital
US startup funding hit $162.8B in H1 2025, up 75.6% YoY, led by AI deals like OpenAI and Scale AI. Meanwhile, VC firms struggle with fundraising, down 33.7%, even as IPOs and M&A signal recovery.
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Despite mounting challenges in venture capital fundraising, U.S. startup funding surged 75.6% in the first half of 2025, driven largely by the unstoppable momentum in artificial intelligence (AI). According to a PitchBook report, investments reached $162.8 billion, marking the second-best performance ever for U.S. startups—only behind the historic 2021 peak.
💡 AI Dominates U.S. Startup Funding in 2025
AI-led innovation continues to dominate the venture ecosystem, with AI-related deals accounting for 64.1% of total deal value and 35.6% of all deals in H1 2025.
📊 Key Highlights:
Total startup funding (H1 2025): $162.8 billion
Top deals:
OpenAI: $40 billion
Meta’s stake in Scale AI: $14.3 billion
Other $1B+ AI investments: Safe Superintelligence, Thinking Machine Labs, Anduril, Grammarly
Q2 alone saw: $69.9 billion invested in U.S. startups
Experts credit the rapid growth of firms like OpenAI and Anthropic for sparking a wave of investor confidence. “If there’s even a chance of replicating that kind of growth in areas like robotics or protein modeling, money will keep flowing,” said Davis Treybig of Innovation Endeavors.
📉 VC Fundraising Declines Despite Startup Surge
While startups are thriving, venture capital firms are facing a funding crunch:
VC fundraising (H1 2025): $26.6 billion across 238 funds
Year-over-year decline: 33.7%
Median fund closure time: 15.3 months — longest in over a decade
The gap highlights the growing disconnect between startup success and VC capital availability, as limited partners grow cautious due to liquidity concerns and underperformance in prior years.
📈 Signs of Recovery: IPOs and M&As Make a Comeback
There’s cautious optimism in the market, as exit activity via IPOs and mergers & acquisitions rose 40% in Q2 compared to last year.
Notable sectors attracting IPO interest include:
AI
Defense technology
National security
Fintech
Crypto
These align closely with policy priorities under President Donald Trump’s second term.
“IPOs like Hinge Health and Coreweave have been well received, and there are a dozen more in the pipeline,” said Lucas Swisher, co-head of growth investing at Coatue.