It’s a two-nation race for artificial intelligence (AI) funding, and venture capitalists in the U.S. are ready to invest more than twice their Chinese counterparts in 2025.
American VCs are gearing up to pour $87.4 billion into AI next year, followed by China’s $40.58 billion, according to a report released Friday by AIPRM, which has analyzed VC investment trends since 2012. The Nos. 3-10 ranked countries are projected to collectively spend less than $30 billion next year.
The study honed in on investments in AI start-ups, AI in environmental sustainability, generative AI start-ups and compute start-ups. The U.S. led in investments in AI start-ups, at $9.5 billion.
The AI market is expected to benefit mightily, not just from a financial climate hungry for the transformational technology, but a wave of AI agents and — most importantly — a tech-friendly political climate.
A rush of merger-and-acquisition activity, and long-awaited potential IPOs, are expected to be ushered in by the incoming Trump administration and its presumed deregulatory stance toward tech in general and AI in particular. Two nominees of President-elect Donald Trump, David Sacks as AI and cryptocurrency czar and Federal Trade Commission Chair Brendan Carr, signal a less-confrontational climate than the Biden administration with outgoing FTC Chair Lina Khan and the Department of Justice’s Jonathan Kanter, who leads the antitrust division.
AI will provide significant return on investment for enterprises, based on a survey of 1,600 Dell Inc. customers. Nearly 80% of them are in the early stages of GenAI implementation. , “Organizations who don’t figure out the right AI strategy and architecture will be at a disadvantage,” Dell Chief Operating Officer Jeff Clarke said in an email.
Another study from Statista, meanwhile, disclosed AI-related investments accounted for 33% of total investments into VC-backed companies in the U.S. in the first nine months of 2024, compared with 14% in the first nine months of 2020.
A key lever will be adoption of AI agents from the likes of Microsoft Corp., Alphabet Inc.’s Google, Salesforce Inc., ServiceNow Inc., Cisco Systems Inc., Adobe Inc., LinkedIn, and others, according to industry observers.
Evan Reiss, vice president and head of marketing at Foxit, predicts 35% of brands will leverage Guardian AIs to manage their creative identity and ensure brand standards are upheld. Guardian AIs will work alongside other AI systems to produce content that aligns with brand guidelines.
“As complex agentic AI systems gain ubiquity in the next three to five years, a new role will emerge: the AI systems engineer. This new quality assurance and oversight role will become essential to enterprises as they manage and continuously optimize AI agents,” Scott Beechuk, a partner at Norwest Venture Partners, said in an email.
Added Courtney Machi, vice president of product and engineering at Andela: “AI may be overhyped — but it can be a game changer for those who figure out how it applies to their business. Those who have put in the resources to understand how to leverage it for their business are pulling ahead.”
