North American AI startups secure $34.5 billion in the second quarter, marking the third-highest quarterly amount ever recorded in funding
In Q2 2025, the venture capital landscape in North America saw a significant shift as AI investment surged, making it the primary driver of venture funding in an otherwise cautious environment.
The quarter witnessed a total of $14.3 billion in early-stage rounds, with a record-breaking $5.9 billion in seed funding. The highest seed funding in three years was marked by Thinking Machines Lab's $2 billion raise at the seed stage.
This surge in AI investment was primarily driven by a strategic shift from investors, who concentrated their funding on startups developing core AI infrastructure and applications. Companies advancing essential AI technologies like model training, robotics, and vertical-specific tools received the lion's share of investments.
Scale AI's $14.3 billion funding round, for instance, symbolized major tech players' deeper engagement and partnerships, such as Meta's collaboration with Scale. This collaboration blurred the lines between startups and superpowers, as exemplified by Meta's recruitment of Alexandr Wang to its AI council through its partnership with Scale.
The funding concentration was especially notable in a small number of large rounds, many above $500 million, highlighting a focus on fewer but more significant AI investments.
Broader venture capital dynamics also supported this surge. Improved exit markets like IPOs and M&A activity raised investor confidence, reinforcing the AI sector as a viable and promising investment area.
Climate tech received some attention in early-stage rounds, but the AI-heavy focus in Q2 2025 made raising capital an uphill battle for startups outside the AI space.
Late-stage deals in Q2 2025 totalled $41.5 billion, one of the highest quarterly hauls in the past three years. Despite the larger but fewer late-stage deals compared to the previous quarter, M&A picked up slightly, providing a few more exit options for investors.
The public debuts of Circle and Chime in the IPO market in Q2 2025 further underscored the vibrant venture investment landscape in North America.
In conclusion, the factors driving this surge in AI investment in Q2 2025 were a strategic investor shift to foundational AI technologies, large-scale funding rounds dominated by a few key companies, and a more optimistic exit environment supporting sustained venture interest in AI. For startups in the AI field, the clock is ticking to stand out before the next hype cycle kicks in.
[1] Source: VentureBeat, "Scale AI raises $14.3 billion in funding, one of the largest rounds ever for an AI startup," 2025. [2] Source: TechCrunch, "Why Q2 2025 was a banner quarter for AI startups in North America," 2025.
The surge in AI investment in Q2 2025 was propelled by a strategic shift from investors focusing on startups that develop core AI infrastructure and applications, such as model training, robotics, and vertical-specific tools. (From the fourth paragraph)
This funding concentration on AI technologies made it challenging for startups outside the AI space, like climate tech, to raise capital during Q2 2025. (From the seventh paragraph)
