Silicon Valley Venture Firms Fuel AI and Climate Tech Transformation

Silicon Valley venture capital firms have entered the second half of 2025 in a frenzy of activity, with artificial intelligence setting a torrid pace for both headline-making deals and sector-wide pivots. According to a new PitchBook report highlighted by TS2 Tech, US startup funding soared 75.6 percent in the first half of 2025, hitting $162.8 billion, the highest total since the record-setting days of 2021. Nearly two-thirds of all venture capital dollars this year have gone directly into AI startups, underscoring a region-wide scramble to back the technology’s next disruptor. The appeal is unmistakable, as generative AI fuels rapid revenue growth at companies from OpenAI to Anthropic. OpenAI raised a colossal $40 billion to expand its compute infrastructure, while Meta splashed out $14.3 billion for nearly half of Scale AI. Other billion-dollar rounds went to major AI players like Adept and CoreWeave, with many citing OpenAI and Anthropic’s rapid gains as proof the sector is far from peaking.

Despite this headline investment, many venture funds themselves are facing a fundraising drought. Venture capital fundraising is down about 34 percent year-over-year, as traditional backers remain cautious amid geopolitical and regulatory uncertainty. Still, as Reuters observed, the fear of missing out on the next foundational AI model is strong enough to keep the funding tap open, resulting in mega-deals even as overall risk tolerance remains muted. At the same time, deregulation and political incentives are moving markets. This month in Pittsburgh, President Trump convened a high-profile Energy and AI Innovation summit, resulting in announcements of nearly $90 billion in new AI-related investments in Pennsylvania alone, with giants like Google and Blackstone focusing on clean energy infrastructure to fuel AI cloud services.

Other VC leaders are critically rethinking their traditional models. Denis Barrier of Cathay Innovation, speaking to French Tech Journal, described how the launch of ChatGPT in 2022 fundamentally rewrote the rules for venture investing. Instead of the old spray-and-pray approach, Cathay closed the EU’s largest AI-dedicated fund this May at $1 billion, focusing on pairing startups directly with corporate customers to accelerate industrial transformation in sectors like fintech, healthcare, and energy. Half of their $235 million in first investments have gone to European AI founders, a sign that the innovation arms race now crosses continents. Collaboration with multinational incumbents—Sanofi, TotalEnergies, BNP Paribas—signals a move to blend entrepreneurial agility with incumbent scale.

Diversification beyond AI is accelerating, especially in climate tech and defense. CorPower Ocean, aiming to make wave energy a viable clean power source, secured new Series B investments from Acario, Tokyo Gas’s Silicon Valley venture arm, and GTT Strategic Ventures, reflecting Silicon Valley’s commitment to climate innovation. These deals emphasize how VC now favors breakthrough tech that can meet clean energy, infrastructure, and resilience needs for both industry and governments.

Meanwhile, diversity, equity, and inclusion remain priorities. Top funds are increasingly emphasizing portfolio diversity as a core investment criterion, not only to address social mandates but to tap broader talent pools in a tightening talent market.

The sum of these trends shows Silicon Valley venture capital is simultaneously contracting and accelerating. Caution abounds at the fund level, but the stampede into AI, climate tech, and advanced infrastructure is rewriting the rules—not just for what gets funded, but for how firms are structured, how deals are made, and how startups and corporates work together. Observers expect these changes to foster a more collaborative, vertically integrated ecosystem where solutions to climate, energy, and security challenges attract the biggest checks....