The 2025 Capital Landscape: A Bifurcated Market

The venture market in 2025 operated on two parallel tracks. AI-focused companies attracted unprecedented capital concentration while non-AI startups faced the tightest funding environment since 2016.

Global VC 2025: $366.8B

AI Companies — Thriving (65%)

• US Deal Value Share: $192.7B
• 2-3 Year Scale Cycles vs traditional 7-10 years
• 65% Faster First Financing (median age at first round vs non-AI)
• 53% to Repeat Founders (up from 21% in 2019)
• $1B+ Mega-Rounds Normalized — 11 companies raised $1B+ in H1 alone

Unicorn Examples: Thinking Machines ($10B), Reflection ($8B), Fireworks AI ($4B), Luma ($4B), Anysphere/Cursor ($29.3B), OpenEvidence ($6B), Abridge ($5.3B)

Non-AI Companies — Struggling (35%)

• Funding Environment: Tightest Since 2016
• Series B/C Squeezed: Middle rounds hardest hit
• IPOs Below Last Round: Median IPO val 0.9x last private
• Must Prove Fundamentals: Revenue, unit economics required
• 7-10 Year Liquidity Paths: Traditional timelines unchanged

Sectors Losing Share: Climate Tech (long cycles), Pure Crypto (post-2022 caution), Horizontal SaaS (no AI moat), Consumer Apps (enterprise focus)

The Mechanism

LP stress (12-13% late capital calls) → GPs prioritize fast cycles → AI wins structurally

This isn’t cyclical—it’s structural. The bifurcation is the new equilibrium.

This is part of a comprehensive analysis. Read the full analysis on The Business Engineer.