Although the US government’s expanded export restrictions on artificial intelligence ( AI ) chips to China, concerns about AI giants’ valuations and disappointing earnings reports in the first half of 2024 sent shockwaves through the market and caused mixed investor sentiment, AI start-ups still managed to make 2024 one of their best fundraising years and get 2025 off to a record-breaking pace, according to a recent report.

During the 12 months of 2024, these companies raised a record-breaking US$89.7 billion in funding rounds, the highest figure in the market’s history, according to data reported by AI-leveraged investment platform AltIndex.com.

However, the strong venture capital ( VC ) funding momentum continued in 2025, helping the AI sector to see the strongest start to a year yet, with AI start-ups raising a whopping US$10.4 billion year-to-date, turning Q1 2025 into their best first quarter so far.

Third of 2022, 2023 total raised in 45 days

Ever since the Nvidia boom, AI start-ups have been a shiny object for VC investors, attracting more fresh capital than most other sectors. That didn’t change in 2025, as several key developments brought new momentum to an already strong VC funding landscape.

Significant investments in key companies like Elon Musk’s xAI, which is in talks to raise US$10 billion, and Figure AI, negotiating US$1.5 billion, alongside new AI applications like Meta’s AI-powered humanoid division, have sparked, according to AltIndex.com, an even bigger investor interest.

At the same time, investors have shifted focus to practical AI solutions, pressuring start-ups to accelerate AI development. This perfect storm of events, the AltIndex.com report notes, has resulted in the strongest start to a year this market has ever seen.

In just 45 days, AI start-ups, according to Crunchbase data, raised a whopping US$10.4 billion, US$2 billion more than in the first three months of 2024. Even if there were no additional funding rounds by the end of the quarter, which is highly unlikely, Q1 2025, AltIndex.com argues, will remain the second-strongest first quarter for VC investments this market has ever seen.

To put this figure into perspective, it took only 45 days of 2025 for AI start-ups, the platform notes, to raise half the value VC investors poured into this market throughout 2020, or one-third of the annual total in 2022 and 2023.

AI start-up funding outpaces other high-growth sectors

“It’s interesting to compare AI start-up funding to other sectors that also attract significant VC investments,” states the AltIndex.com report. “Since the beginning of the year, AI start-ups have raised three times more money than fintech start-ups ( US$3.3 billion ), 40% more than semiconductor companies ( US$6.4 billion ) and only US$1.7 billion less than the biotech sector ( US$12.1 billion ).

With $10.4 billion of fresh capital injected into the AI start-up market, the total amount raised by these companies, the report points out, has surged to US$287 billion. Around 65% of that value, or US$189 billion, went to companies in the United States, with California leading the charge, proving the US leadership in the AI industry.

Asian AI start-ups raised the second-highest total at US$52.1 billion, the report notes, while European companies follow with US$34.5 billion. Machine learning start-ups, Crunchbase data show, lead in funding activity, with US$131 billion raised so far, followed by AI software companies at US$83.4 billion.