North America’s AI Funding Boom: $79.7B Fuels Innovation Despite Policy Hurdles

NEW YORK, New York, June 5, 2025 - North America continues to lead the global AI venture capital landscape, capturing 86.2% of worldwide AI investments in 2025, with $79.74 billion poured into AI and machine learning startups, according to investment data. Between February and May 2025, venture capitalists invested $69.7 billion across 1,528 deals in the region, dwarfing Europe’s $6.4 billion and Asia’s $3 billion.

This dominance, driven by massive funding rounds like OpenAI’s record-breaking $40 billion raise, underscores the U.S. as the epicenter of AI innovation, even amidst political and regulatory challenges. However, concerns about overvaluation and inefficient capital allocation raise questions about the sustainability of this investment surge.

OpenAI’s Historic $40 Billion Funding Round

In March 2025, OpenAI secured a $40 billion funding round led by SoftBank, valuing the ChatGPT creator at $300 billion, making it one of the most valuable private companies globally, behind only SpaceX. The investment, which includes an initial $10 billion tranche and up to $30 billion more by year-end, supports OpenAI’s ambitious Stargate project, an $18 billion joint venture with SoftBank and Oracle to build advanced AI infrastructure. Additional funds will scale compute resources for OpenAI’s 500 million weekly users and advance research toward artificial general intelligence.

Investors like Microsoft, Coatue, and Thrive Capital joined the round, reflecting intense competition in the AI sector as companies like Anthropic, which raised $3.5 billion in March, vie for dominance. This “gold rush” in AI funding highlights the sector’s transformative potential but also its high financial stakes.

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Trump Administration’s AI Research Cuts

Despite North America’s investment lead, the Trump administration’s 2026 budget proposal introduces significant challenges, proposing a 37% cut to the National Institutes of Health and over 50% to the National Science Foundation, key supporters of foundational AI research. These reductions, part of a 23% cut to nondefense discretionary spending, have sparked alarm among scientists, with industry leaders warning that they could jeopardize U.S. technological leadership.

A federal judge recently blocked some cuts following a lawsuit from 22 states, but the administration’s selective grant cancellations and tightened approval processes continue to create uncertainty. Critics argue these policies could hinder long-term AI innovation, even as private venture capital fills immediate funding gaps.

Did You Know?
In Q1 2025, AI startups globally raised $73 billion, with North America’s 70% share driven by mega-deals like OpenAI’s $40 billion round, more than half of 2024’s total AI funding.

Europe’s Growing AI Investment Gap

While North America commands the lion’s share of AI funding, Europe is making strides but faces structural challenges. In Q1 2025, European AI startups raised €4.6 billion, accounting for 27.5% of the region’s venture capital and surpassing SaaS investments for the first time. Total European venture funding hit €16.7 billion, up 10.8% year-over-year, with AI investments growing 55% compared to Q1 2024.

However, Europe’s global VC share dropped from 18% to 12%, partly due to the absence of mega-rounds like OpenAI’s. Initiatives like Horizon Europe and Cathay Innovation’s $1 billion AI fund aim to bolster Europe’s AI ecosystem, but reliance on U.S. investors and fragmented markets hinder progress, leaving Europe trailing in the global AI race.