Press release
AI Continues to Fuel US VC Investment Despite Higher Burn Rates; Silicon Valley Bank Releases Latest State of the Markets Report
AI investments account for 58 cents of every VC dollar deployed in 2025 SAN FRANCISCO, Aug. 5, 2025 /PRNewswire/ -- While AI companies continue to attract
About this update from First Citizens Bancshares, Inc.
[{"type":"text","content":"AI investments account for 58 cents of every VC dollar deployed in 2025\nSAN FRANCISCO, Aug. 5, 2025 /PRNewswire/ -- While AI companies continue to attract significant venture capital (VC) investment, these companies are also operating with higher cash burn rates, according to the latest report from Silicon Valley Bank (SVB), a division of First Citizens Bank. AI companies account for approximately one-third (36%) of VC deals and the majority (58%) of total VC investments, but they are also showing higher burn rates and lower profit margins, according to the report.\n\n \n \n \n \n \n \n\n \n\"AI is one of the most transformative innovations of the past two decades, driving strong potential across all sectors and industries. While increasing investment raises concerns about lofty valuations and high burn multiples, we remain optimistic that AI will help to push the innovation economy forward,\" said Marc Cadieux, President of Silicon Valley Bank, a division of First Citizens Bank, and co-author of the bi-annual State of the Markets Report. \"Founders and CFOs are starting to focus more on balancing growth and profitability. After being in a constant state of flux since 2019, revenue growth rates and profitability in the tech sector have stabilized over the last four quarters.\"\nAccording to SVB, 75% of all venture-backed tech companies are growing revenue, with 63% of those either profitable or improving profitability. The percentage of profitable companies studied has more than doubled since 2022.\n\"What you're seeing today is the start of the institutionalization of venture. The industry is kind of like Cro-Magnon on the evolutionary scale from ape to human,\" Ian Sigalow, co-founder and managing partner of Greycroft, stated in the report. \"We're somewhere in the first third of evolution. We will become an industry that looks more like private equity given the number of companies and the global scale and ambition of these businesses.\"\nLeveraging proprietary data and research, SVB's bi-annual State of the Markets report provides an outlook on the innovation economy, focusing on venture capital (VC) trends, fundraising, the impact of AI, and the current state of the innovation economy market.\nKey Numbers – At a Glance\nFundraising: Fundraising by venture funds in the US is on track to hit $56B this year, a 21% drop from 20...