In 2024, investments in artificial intelligence (AI) and machine learning (ML) startups grew by more than 50%, reaching $131.5 billion. Every third dollar of venture capital worldwide was invested in AI startups. However, such a huge influx of funds causes mixed feelings among investors. Some see it as a confirmation of the popularity of the sector, while others see it as a distortion of the market.

The main problem is the concentration of investments. Shashank Saxena, Managing Partner at Sierra Ventures, notes that too much money is directed towards developing basic models and infrastructure:

"Big players like OpenAI, xAI, and Anthropic have received record funding, but this creates an imbalance. Investment in applied solutions that can bring long-term profits remains insufficient."

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This overheating of the market seems unsustainable. And although almost every fourth new startup today is related to AI, it is becoming increasingly difficult to find promising projects. However, as Sapphire Ventures' Kasber Wang points out, this increase in complexity is offset by an increase in potential returns:

"It's become harder to sort through startups, but their capabilities have also become much greater."

AI has become a dominant force in the venture market, but questions about where to go next and how to avoid overheating remain.