US VC Funding Value Jumps 64% on Mega AI Rounds, Stirring Bubble Warnings
US venture capital funding climbed 64% year-on-year between January and August 2025, even as deal volume dropped by 5%, according to GlobalData. The divergence reflects a market in which investors are chasing fewer, much larger transactions. While the trend highlights confidence in scaling high-potential firms, it also raises concerns that capital is concentrating unsustainably in a handful of ventures.
GlobalData analyst Aurojyoti Bose explained the rationale driving this behavior.
“The sharp rise in funding value, despite a drop in deal count, highlights investors’ growing preference for backing fewer but much larger rounds. Their focus has shifted to scaling high-potential companies through large-ticket investments that can deliver stronger long-term returns.”
However, some would argue this concentration of funding risks creating distortions if growth expectations do not materialize.
The imbalance between fewer deals and larger ticket sizes echoes familiar bubble dynamics: surging valuations, investor competition to enter a narrow set of companies, and growing reliance on hype sectors to sustain momentum.
AI Megarounds Dominate the Surge
The rise is being driven primarily by artificial intelligence companies. OpenAI’s $40 billion raise dwarfs almost every other transaction in 2025, followed by Anthropic with $3.5 billion, Infinite Reality with $3 billion, and Thinking Machines Lab with $2 billion. Even Grammarly secured $1 billion. These sums represent levels once unthinkable in venture capital, reflecting both AI’s perceived potential and investor urgency not to miss out.
Industry leaders themselves have flagged the risk of overheating. Sam Altman, CEO of OpenAI, remarked:
“Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes.”
He warned that at current valuations,
“Someone is going to lose a phenomenal amount of money.”
Meta’s Mark Zuckerberg echoed that a bubble is “definitely a possibility,” though he argued the largeger risk would be failing to invest aggressively enough in AI.
While the AI sector promises transformative change, the scale and pace of capital inflows mirror ahead internet-era bubbles, where funding far outpaced the revenue and adoption curves of the underlying technology.
Global Share Highlights Risks and Rewards
The US accounted for around 30% of global VC deal volume in the first eight months of 2025 but a much larger 65% share of deal value. The disproportion underscores both the strength of the US innovation ecosystem and the risks of over-concentration. If valuations recalibrate, the correction would reverberate not only across US beginups but through global financial markets that track American venture trends.
According to Bose,
“The US’ share of VC value globally has grown disproportionately during the first eight months of 2025, indicating a clear trend towards larger investments.”
While structural advantages—such as deep capital pools and strong venture networks—justify some of the dominance, critics warn the imbalance points to bubble-like vulnerability. Investors are placing extraordinary bets on companies whose commercial models are still being tested.
For now, abundant liquidity and investor optimism are sustaining the surge. But if AI hype cools or macroeconomic conditions tighten, valuations could face sharp corrections, leaving late entrants exposed to steep losses.
Investor Takeaway
