US VC Investment in AI Continues to Rise Despite Higher Burn Rates and Declining Fundraising

AI companies account for 58% of total VC investments in 2025, despite higher burn rates. US venture fund fundraising is projected to reach $56 billion, down 21% from 2024. Only 21% of tech unicorns are profitable, despite 72% achieving year-over-year growth. The tech ecosystem shows signs of improvement, with 75% of venture-backed tech companies growing revenue and 63% either profitable or improving profitability.

The venture capital landscape in the United States continues to be dominated by artificial intelligence (AI) companies, according to the latest report by Silicon Valley Bank (FCNCA). The report reveals that AI companies account for 36% of venture capital (VC) deals and 58% of total VC investments in 2025, despite operating with higher burn rates [1].

US venture fund fundraising is projected to reach $56 billion in 2025, a 21% decrease from 2024. Despite the decline, the report indicates that 75% of venture-backed tech companies are growing revenue, with 63% either profitable or improving profitability. Notably, mega-funds now represent 36% of US VC fund capital raised in the last three years, up from 20% six years ago [1].

The report also highlights the performance of AI companies, with Series A AI companies burning $5 to gain $1 of new revenue. While 72% of unicorns achieved year-over-year (YOY) growth, only 21% reached profitability. This indicates a challenging environment for AI startups, where rapid growth often comes at the expense of profitability [1].

The acquisition of Vigil Neuroscience, Inc. by Sanofi (ENXTPA:SAN) for approximately $370 million further underscores the significant investment in the tech sector. This acquisition, which closed on August 5, 2025, is part of a broader trend of pharmaceutical companies investing in innovative technologies to drive growth and profitability [2].

International Flavors & Fragrances Inc. (NYSE:IFF) reported its second-quarter 2025 results, showing currency-neutral sales growth of 3% despite a 4% decline in reported revenue. The company announced significant portfolio changes and a new share repurchase program while maintaining its full-year outlook. This demonstrates the resilience of the company's strategy despite challenging market conditions [3].

In conclusion, while the tech ecosystem shows signs of improvement, the high burn rates and profitability challenges faced by AI companies remain significant hurdles. However, the continued investment and growth in the sector suggest a robust and dynamic market, poised for further innovation and development.

References:
[1] https://www.stocktitan.net/news/FCNCA/ai-continues-to-fuel-us-vc-investment-despite-higher-burn-rates-c2u9g59ijiuj.html
[2] https://www.marketscreener.com/news/sanofi-completed-the-acquisition-of-vigil-neuroscience-inc-from-atlas-venture-fund-xii-l-p-atlas-ce7c5ed8df89f322
[3] https://za.investing.com/news/company-news/iff-q2-2025-presentation-3-currencyneutral-growth-amid-portfolio-reshaping-93CH-3822787