SAN FRANCISCO, August 5, 2025 – 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.

“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.”

According 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.

“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.”

Leveraging 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.

Key Numbers – At a Glance

  • Fundraising: Fundraising by venture funds in the US is on track to hit $56B this year, a 21% drop from 2024 and the lowest level since 2017. Mega-funds are dominating, leading to larger deal sizes, especially in AI. Among conventional VC fund capital raised in the US over the last three years, more than 36% went to funds at least a billion dollars in size—up from 20% for the period ending six years ago.
  • AI Burn Rate: $5 is burned by the median Series A AI company to gain $1 of new revenue. Burn multiples for AI companies are higher than other sectors, suggesting low-cost capital could be fueling inefficient growth.
  • IPOs: There were 10 US VC-backed tech IPOs in the first half of 2025. With the IPO window finally cracking open, it appears pent-up demand from investors could drive continued activity through the back half of the year.
  • Investors: One-third of US VC investment came from deals with the six largest funds. The increase from 10% in the period ending in November 2024 was driven almost exclusively by massive AI deals.

Key Themes: 

  • Influence of Venture Podcasts: According to SVB’s new Podcast Sentiment Index, the first-of-its-kind index drawing from 3,200 venture podcast episodes, AI and defense are high on the list of hot topics among VC firms. Key themes in podcasts also included improving sentiment of AI after ChatGPT was released and the momentum continues. Meanwhile, defense received a huge boost in mentions following the 2024 presidential elections.
  • Unicorn KPIs: While 72% of tech unicorns are achieving YOY growth, only 21% are turning a profit. While growth can naturally slow as companies scale, 91% of non-growing unicorns are burning through their once-ample cash reserves.
  • Geography of Innovation: New York has become a fintech standout, with nearly 30% of local VC dollars going to the sector in 2024 — more than double the national average. Austin dominates in consumer tech, and Denver received 54% more share of VC dollars than the national average for climate tech.

Learn More

To access SVB's 2025 State of the Markets report please visit: State of the Markets Report | Silicon Valley Bank

To share its deep industry knowledge, SVB develops various insights reports focused on sectors spanning the innovation economy. For the complete library of SVB's signature research reports, please visit Market Research Industry Trends & Insights | Silicon Valley Bank (svb.com)

About Silicon Valley Bank

Silicon Valley Bank (SVB), a division of First Citizens Bank, is the bank of some of the world’s most innovative companies and investors. SVB provides commercial banking to companies in the technology, life science and healthcare, private equity and venture capital industries. SVB operates in centers of innovation throughout the United States, serving the unique needs of its dynamic clients with deep sector expertise, insights and connections. SVB’s parent company, First Citizens BancShares, Inc. (NASDAQ: FCNCA), is a top 20 U.S. financial institution with more than $200 billion in assets. First Citizens Bank, Member FDIC. Learn more at svb.com