AI Startup Valuations Spark Bubble Fears as Funding Hits Record Highs
Artificial intelligence (AI) startups are pulling in unprecedented levels of funding, but some of the world’s largest investors are sounding the alarm over soaring valuations. At the Milken Institute Asia Summit 2025 in Singapore, global investment leaders cautioned that venture capital may be overheating, warning of a potential bubble in early-stage AI companies.
Bryan Yeo, group chief investment officer at Singapore’s sovereign wealth fund GIC, told attendees that the hype surrounding AI is driving valuations to unsustainable levels. “Any company startup with an AI label will be valued right up there at huge multiples of whatever the small revenue is,” he said, noting that while a few companies may justify such prices, many others do not.
Data supports the frenzy: in the first quarter of 2025 alone, AI startups raised $73.1 billion worldwide—making up nearly 58% of all global venture capital funding, according to PitchBook. Mega-rounds such as OpenAI’s record-breaking $40 billion raise have only fueled investor appetite, intensifying the fear of missing out (FOMO) across the industry.
Yet, experts are split on whether AI is already in bubble territory. Todd Sisitsky, president of global investment firm TPG, said that while some AI firms are achieving extraordinary growth—hitting $100 million in revenue within months—others are being valued at staggering levels, with some early-stage ventures worth between $400 million and $1.2 billion per employee. “That’s breathtaking,” he remarked, adding that investors risk overlooking the fundamentals in their rush to back the next big thing.
For now, the surge in AI funding is masking broader economic uncertainties, but analysts caution that market expectations may be outpacing what the technology can realistically deliver. As capital continues to pour into the sector, investors face a critical question: is this the dawn of a new technological revolution, or the early signs of an AI bubble waiting to burst?
source: Reuters