By Vicky Sidler | Published 5 December 2025 at 12:00 GMT+2

The startup world has always played favorites. In the 90s, it was anything with a dot com. In the 2010s, it was social apps for people who didn’t want to talk to each other in person. And now? If your business doesn’t have artificial intelligence in the name, the pitch deck, and the fridge magnets, investors may not even open your email.

According to Bloomberg, new data from PitchBook shows 2025 is set to become the first year where more than half of all global VC money goes to AI startups. Not tech in general. Just AI.

TL;DR:

• AI startups have taken 53 percent of global VC investment in 2025

• In the US, that number is nearly 63 percent

• Fewer startups overall are getting funded

• Unless you’re an AI brand or a big name, you’re likely out of luck

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Table of Contents:

What the Numbers Actually Say:

Let’s start with the headline figures. According to PitchBook:

• VC firms have invested $366.8 billion in 2025 so far

• $192.7 billion of that went to AI

• In the latest quarter, 62.7 percent of US VC funding was AI focused

• Globally, 53.2 percent of venture money went to AI startups

These numbers are not gentle suggestions. They are neon signs flashing "Go AI or Go Home."

PitchBook’s director of research Kyle Sanford described the trend as a “bifurcated” market. You are either building in AI or you are not. You are either a big name or you are not. And if you are not both, good luck getting a call back.

Small Business Translation: What Does This Mean for You?

Now, if you are not building a venture-backed startup, you might think this has nothing to do with you. But hang on.

This funding shift impacts everything. From what tech becomes affordable, to what tools you’ll use next year, to which marketing trends get picked up and which ones die quietly behind a paywall.

When VCs shift billions of dollars toward a single category, that category floods the market with tools, platforms, and SaaS solutions claiming to solve every possible problem. Including ones you did not know you had.

And because most of that AI money is going to well-known names like Anthropic, it is not fuelling broad innovation. It is concentrating power. Fewer startups, bigger cheques, more polished pitches.

Which means:

• Small businesses will be sold AI tools whether they need them or not

• Marketing content will be increasingly AI-generated and increasingly similar

• Non-AI startups and service providers will struggle to get noticed, no matter how good they are

Why Everyone Suddenly Sounds the Same:

The AI flood has another side effect. The sameness problem.

AI makes it easier to produce content. But it also makes it easier for everyone to say the same thing. When half the internet is built using similar tools trained on the same data, the result is a blur of interchangeable voices.

For service-based businesses, this is a risk.

If your brand starts sounding like the latest AI tool trying to explain synergy and deliverables, your actual value gets buried under buzzwords.

That’s not strategy. That’s noise.

The Real Takeaway—Clarity Beats Hype:

Here’s the part most small business owners forget. You are not trying to win VC money. You are trying to win trust.

And trust is not built by throwing AI keywords into your headline like seasoning on a bad steak.

It is built by:

• Explaining clearly what problem you solve

• Showing that you understand your customer’s pain

• Making it easy for them to say, “Yes, that’s what I need”

Whether the rest of the market is AI-hyped or not, clarity still wins.

As a StoryBrand Certified Guide and Duct Tape Marketing consultant, I help businesses strip back the fluff and speak directly to what matters.

No jargon. No guessing. Just one clear message that customers get.

If that sounds refreshing, here’s a starting point.

👉 Download the free 5 Minute Marketing Fix.

Related Articles:

1. Meta’s AI Spending Spikes But There’s No Product

If this article helped you see where the money’s going, this one explains what happens when even the biggest players forget to build something useful.

2. OpenAI’s $27B Loss Could Tank the Whole AI Industry

While VC money floods AI, this post shows what happens when the revenue doesn’t follow.

3. AI Industry’s Profit Problem Just Got Real

If you’re wondering whether the AI boom will last, this article breaks down where the cracks are starting to show.

4. Is Generative AI Worthless? Maybe That’s a Good Thing

Sick of AI hype? This one explores how small businesses can win by doing the opposite of what’s trendy.

5. AI Will Make the Rich Richer—But It Might Also Backfire Spectacularly

Learn why big investments might lead to big regret—and how small businesses can avoid following them off a cliff.

Frequently Asked Questions About AI Dominating VC Funding in 2025

1. What percentage of VC funding went to AI startups in 2025?

So far in 2025, AI startups have taken 53.2 percent of global VC investment. In the US, that number is even higher at 62.7 percent.

2. Why are investors putting so much money into AI?

VCs are betting big on AI because they believe it will reshape nearly every industry. The hype, the market potential, and a few big success stories are attracting most of the funding.

3. Does this mean non-AI startups can’t get funding?

It’s getting much harder. PitchBook data shows fewer startups are being funded overall, and most of the money is going to large, well-known AI players. If you're not in AI, you’ll need a very compelling story to stand out.

4. What does “bifurcated market” mean in this context?

It means the market is split. You're either building in AI, or you're not. You're either a big, visible brand, or you're struggling to raise at all. There’s not much middle ground left in VC circles.

5. Should small business owners care if they’re not looking for funding?

Yes. VC money shapes what tools, tech, and trends reach your industry. Even if you're not raising capital, you’ll feel the ripple effects in your software, marketing tools, and customer expectations.

6. Will this AI trend affect small business marketing?

Absolutely. Expect more AI-generated content, more sameness in messaging, and more pressure to stand out with clarity and originality. The tools may get smarter, but your brand voice still needs to be human.

7. What’s the risk of jumping on the AI bandwagon too fast?

You might spend money on tools you don’t need, dilute your message with jargon, or start sounding like everyone else. If your service isn't AI-driven, trying to fake it won’t help your growth—it might confuse your audience.

8. What’s a better strategy than chasing hype?

Clear messaging. Know your customer, solve a real problem, and say what you do in plain language. Trends come and go, but clarity converts.

9. How can I make my small business message stand out right now?

Use a framework like StoryBrand to clarify your message. Focus on the problem you solve, the transformation you offer, and the next step a customer should take. You don’t need to shout. You need to make sense.

10. Where can I get help clarifying my message?

You can start with the5 Minute Marketing Fix. It’s a free tool that helps you write one clear sentence that shows people what you do and why it matters.