Angel investors favor established AI firms, pushing record investments in 2025

2025 has reached its zenith in terms of investments, and AI startups are the ones reaping the most benefits.

This year, investments in AI are record high, and could make 2025 the first year where more than half of all venture capital (VC) money goes to AI startups. Angel investors have already taken a leap of faith in AI startups in the form of $192.7 billion so far, compared to last year, when global AI startups raised $136 billion.

However, as these investments set record after record, only a few are actually benefiting from it – most of the money flows to big names such as Anthropic and Elon Musk’s AI venture xAI.

For example, just this week, Anthropic introduced Claude Sonnet 4.5, an advanced AI model that can autonomously code for longer uninterrupted stretches (up to 30 hours) and better handle finance and scientific tasks.

Smaller startups, on the other hand, especially those outside of AI, are finding it harder to attract investments. As IPOs and acquisitions remain slow, many investors tend to stay on the safe side and stick to companies that have already proven their potential, rather than market newbies.

“The market is splitting in two,” said Kyle Sanford, director of research at PitchBook, via Bloomberg.

“You’re either in AI or you’re not. You’re a big player or you’re not.”

That is well illustrated by how startups are doing overall in their attempts to attract investors. Compared to recent years, fewer companies are raising money in 2025, and fewer VC firms are raising fresh funds.

In simpler terms, this basically means that if fewer VC companies raise fresh funds, it limits the amount of money they can invest in companies that are in very early stages of developing their businesses.

"Any company startup with an AI label will be valued right up there at huge multiples of whatever the small revenue (is)," said Bryan Yeo, group chief investment officer at Singapore sovereign wealth fund GIC.

Globally, 823 funds have raised just over $80 billion so far, compared with more than 4,400 funds raising $412 billion in 2022.

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