AI startups are riding a wave of fresh capital in 2025—even as the Federal Reserve keeps interest rates at multi-decade highs. Instead of slowing down, the sector is posting some of its boldest funding figures yet, fueled by surging demand for both AI infrastructure and specialized applications.
The most eye-catching move comes from Meta, which plans to spend up to $72 billion on AI infrastructure in 2025—more than doubling its capital expenditures from last year. Susan Li, Meta's CFO, makes the stakes clear: "We expect that developing leading AI infrastructure will be a core advantage... so we expect to ramp our investments significantly in 2026." In other words, compute power is now the ultimate weapon in the AI arms race, and Meta is betting big to win.
Startups are also attracting serious cash. Singapore's SixSense, a deep tech company founded by Avni Agarwal, just landed an $8.5 million Series A—bringing its total funding to around $12 million. SixSense uses AI to boost semiconductor manufacturing yields, a pain point for an industry increasingly wary of supply chain hiccups. Agarwal explains, "We're seeing fabs...expand aggressively...That makes them far more open to AI-native approaches like ours from day one." With global chipmakers diversifying into Southeast Asia and the U.S., investors are betting that AI-native manufacturing will become the new normal.
Meanwhile, in the U.S., Conversion—an AI-powered marketing automation startup founded by two UC Berkeley dropouts—secured a $28 million Series A led by Abstract. Their model? Layering advanced AI automation over established platforms like HubSpot, showing how vertical SaaS plays can unlock new value with the right technical twist. Conversion CEO Neil Tewari recalls his journey: "I told him I had this interest [in entrepreneurship], and four years later, he was actually the first person to write us a check into the company."
What's remarkable is how this funding boom flies in the face of tight monetary policy. Higher interest rates usually mean less venture money, especially for risky bets. But in AI, VCs are undeterred. They're chasing deep tech applications—like SixSense's semiconductor defect detection and Conversion's marketing automation—where the upside vastly outweighs the cost of capital. The compute arms race among giants like Meta also lifts valuations for startups selling the picks and shovels of the AI age: hardware, efficiency software, and infrastructure tools.
For entrepreneurs, this climate is both opportunity and warning. The bar for funding is high, but so are the rewards if you can solve infrastructure bottlenecks or build on top of established platforms. Investors are looking beyond Silicon Valley, with Asia-Pacific innovation hubs gaining traction as geopolitical competition reshapes the global tech map.
The message is clear: if you're building for the AI future, the money is still there—even if borrowing costs are steep. Founders with a technical edge and a knack for plugging into new markets will find capital ready to back bold moves. Everyone else? The clock is ticking.
Join the Conversation