Welcome to this week’s Founders Focus! We’re diving into the infrastructure investments powering AI’s next phase and the alternative funding models reshaping startup finance.

Headlines & Trends

North American Venture Funding Surges to $145B in H1 2025

​North American startups secured $145 billion in funding during the first half of 2025, driven primarily by investor enthusiasm around artificial intelligence applications. This surge contrasts with global trends, where overall fundraising fell 34% year-over-year to $223 billion in H1 2025, highlighting the concentration of capital in AI-focused markets.

AI Infrastructure Investment Reaches $246 Billion

​Executive confidence in AI execution has jumped from 53% to 71% in just one year, fueled by a massive $246 billion in infrastructure investment. Major cloud service providers are ramping up AI infrastructure spending to maintain competitive positioning, with four major North American CSPs leading strategic investments.

Revenue-Based Financing Emerges as Equity Alternative

​Funding diversification is becoming a defining trend of 2025, with revenue-based financing (RBF) and corporate venture capital gaining significant traction. RBF allows founders to retain control while accessing growth capital, with industry experts noting that startups can “grow without diluting ownership” through these alternative structures.

Strategies & Tactics

Hybrid AI Models Dominate Enterprise Strategy

​Businesses are adopting hybrid AI approaches, combining large language models with smaller, domain-specific models to maximize results while safeguarding sensitive data. This strategic shift reflects growing sophistication in AI implementation, moving beyond simple LLM integration toward customized solutions.

Tech M&A Resilience Despite Macroeconomic Headwinds

​Technology M&A activity remained resilient in H1 2025, particularly in AI infrastructure, cybersecurity, and vertical software sectors. While overall deal volumes decreased 11% due to macroeconomic and geopolitical pressures, strategic acquisitions in high-growth tech segments continued at steady pace.

Data Center Energy Demand Accelerates

​The early months of 2025 have revealed that data center energy demand tied to AI is accelerating faster than current energy infrastructure can support. This creates both challenges and opportunities for startups developing energy-efficient AI solutions and sustainable infrastructure technologies.

Market Insights

AI Sector Captures 28% of Global Investment

​Artificial intelligence maintained its position as the top sector by investment dollars, with AI startups receiving close to $19 billion in Q3 2024, representing 28% of total venture funding. This concentration reflects continued investor confidence in AI’s transformative potential across industries.

Technology Deal Activity Shows Mixed Signals

While technology deal volumes decreased 11% in H1 2025, the sector demonstrated remarkable resilience compared to other industries. The AI boom and continued technology disruption are expected to keep the TMT (Technology, Media, Telecommunications) sector active for M&A throughout 2025.

Enterprise AI Maturity Gap Persists

Despite widespread AI investment, only 1% of companies believe they have reached AI maturity, according to McKinsey’s 2025 workplace AI report. This gap presents significant opportunities for startups developing AI implementation and optimization solutions.

Tools & Resources

Essential Infrastructure Considerations

• Hybrid IT Strategy: 70% of G2000 C-suite executives will require ROI and value analysis to justify new AI infrastructure spending by 2026
• Energy Efficiency: Startups should prioritize sustainable AI infrastructure solutions given accelerating energy demands
• Regulatory Compliance: Companies with $500+ million revenue are adapting faster to AI-related regulatory requirementsl

The startup landscape continues evolving rapidly, with AI infrastructure investments and alternative funding models creating new pathways for growth. Stay tuned for next week’s insights on emerging market opportunities and regulatory developments.