AI Continues to Fuel US VC Investment Despite Higher Burn Rates; Silicon Valley Bank Releases Latest State of the Markets Report

Core Insights - AI companies are attracting significant venture capital, accounting for 58% of total VC investments and 36% of VC deals in 2025, but they are also experiencing higher cash burn rates and lower profit margins [1][2] Fundraising - US venture fund fundraising is projected to reach $56 billion in 2025, marking a 21% decline from 2024 and the lowest level since 2017 [6] - Mega-funds are increasingly dominating the market, with over 36% of conventional VC fund capital raised in the last three years going to funds of at least $1 billion, up from 20% six years ago [6] AI Burn Rate - The median Series A AI company burns $5 to generate $1 of new revenue, indicating higher burn multiples compared to other sectors, suggesting inefficient growth fueled by low-cost capital [6] IPO Activity - There were 10 US VC-backed tech IPOs in the first half of 2025, with potential for increased activity in the latter half of the year due to pent-up investor demand [6] Investor Dynamics - One-third of US VC investment is attributed to deals with the six largest funds, a significant increase from 10% in November 2024, primarily driven by large AI deals [6] Unicorn Performance - 72% of tech unicorns are achieving year-over-year growth, but only 21% are profitable, with 91% of non-growing unicorns depleting their cash reserves [6][7] Geographic Trends - New York is emerging as a fintech hub, with nearly 30% of local VC dollars allocated to the sector in 2024, more than double the national average [7] - Austin leads in consumer tech investments, while Denver has received 54% more VC dollars than the national average for climate tech [7]