Venture capital bounced back in 2025

Venture Capital is so back.

Last year, around $340 billion of VC funding was deployed. That marks a jump of at least $100 billion compared to any of the prior three years, according to a new report from Pitchbook and the National Venture Capital Association. 

The last spike in venture capital funding was back in the low-interest-rate, easy-money days of 2021.

It was like “a drunken frenzy where venture capitalists gave a lot of money to a lot of people at very high valuations,” said Josh Lerner, a professor of investment banking at the Harvard Business School.

But after any wild party, “it's inevitable you're gonna have a hangover,” he said. “And the last three years have definitely been that of a hangover.”

Now, though, the VC spending party is back on. And Seth Kaplan, a professor at the University of Chicago, said you’ll be shocked — just totally and utterly gobsmacked — to learn where all that money is going: “Not surprisingly, it’s AI.”

Half of all VC dollars last year went to just 0.05% of all VC deals. The money got hoovered up by the handful of firms building the most powerful AI models, like the ones developed by OpenAI, Anthropic, and xAI.

“ These foundational models are a base that so many other companies are able to build value off of, and they're attracting so much capital as a result of that,” said Shiloh Tillemann-Dick with the National Venture Capital Association.

Venture capital has long been something of a winner-take-all industry, said Tillemann-Dick. But the level of concentration right now? “I think this is unusual.”

One reason besides just the general hype around AI, he said, is that it does require a good deal of capital. “You have some really expensive talent, and you have some really expensive hardware and energy costs to go with it.”

And this VC-AI spending spree is likely to continue, per Steve Kaplan of the University of Chicago, because the stock market is strong and interest rates are on their way down.

“In those situations you tend to see venture capital spending being robust,” he said. “The hard part is knowing when you've gone too far.”