Category:
AI and ML, Growth Equity, Venture Capital
It’s official: 2025 has become the year AI went from industry disruptor to the heart of the growth equity story. Whether you’re an allocator, a founder, or an operator watching deal sheets heat up again, the message is clear—a new capital cycle is here, and artificial intelligence is its power source.
Massive Capital Deployment: AI’s First Trillion?
The numbers put the trend in bold. In just Q1, AI startups raked in a staggering $59.6 billion in global venture funding, accounting for 53% of all deals in the period (source: Crunchbase). That’s more than double most market observers predicted at the tail end of 2024, driven as much by mega-deals as by a surge in later-stage conviction checks from growth funds.
OpenAI is the obvious headliner here, with its $40 billion Series H led by SoftBank—by itself, enough to redraw the entire quarterly funding chart. But scratch off that outlier, and you’re still left with nearly $20 billion flowing into other, not-quite-household AI names.
Look at Scale AI and its $14.3 billion raise at a $29 billion post, or xAI’s $10 billion mega-round at an $80 billion pre. The sheer appetite for scale has given growth equity investors the chance to write $500 million, $1 billion, even multi-billion checks into rounds that, until recently, would’ve looked more at home in Silicon Valley’s dreams than its reality.
Why Growth Equity Loves AI (It’s Not Just the Hype)
2025 isn’t just about cash. For GPs at LeverVenture and our peers across US and European markets, the opportunity set in AI has rapidly matured, pulling away from “spray and pray” and toward “pick and prove.” Unlike wave-one VCs betting on alpha-neural-net startups, growth equity teams are focusing on companies that can prove market fit, revenue, and scalability, not just algorithms.
Late-stage rounds now dominate. North American startups alone attracted $83 billion in Q1, with much of it flowing into growth-stage and pre-IPO scale players (source: PitchBook). What’s really notable? The funding is distinctly concentrated in firms showing not just product-market fit, but repeatable, defensible enterprise sales.
Meanwhile, the AI ecosystem is fragmenting in all the right ways. Investors are chasing high-value opportunities in model infrastructure (think Groq’s $1.5 billion raise or Safe Superintelligence’s $2 billion at $32 billion valuation), applications, and vertical integration, not just the next “big language model.” The winners: platforms with sticky customers, enterprise-focused APIs, data network effects, and (increasingly) the back-end rails for every other AI business.
From Megacap Tech to “Real” AI: The New Value Chain
For allocators, a crucial shift is underway. Throughout 2023, most of the attention went to AI-adjacent megacaps—Nvidia, Microsoft, Alphabet, and Amazon—whose multiples ballooned as investors fled market headwinds elsewhere. By mid-2025, the narrative has become more nuanced.
Analysts and fund managers now see a broadening opportunity set as valuations of the “Magnificent Seven” stabilize and the rest of the S&P 500 starts catching up (source: Institutional Investor). Instead of a “catch down” typical of post-bubble markets, we’re seeing a “catch up”—where proven, sector-specific AI startups deliver operational leverage and tangible value, not just story.
Growth equity funds (including LeverVenture’s teams on both sides of the Atlantic) are focused on integrators: companies that can prove, through real adoption metrics and actual customer earnings, that they’re embedding AI in production. These aren’t the “AI-washing” pitches of old. We’re talking vertical SaaS, predictive healthcare analytics, manufacturing robotics, fintech KYC engines, and more—all sectors where AI is now a must-have, not a buzzword.
For more on sector-focused, AI-powered investing, see our Q2 “Beyond the Check” analysis: https://leverventure.com/insights/beyond-the-check-how-growth-equity-firms-are-accelerating-innovation-in-2025.
The New VC Playbook: Traction, Talent, and Tailwinds
If you’re a founder, operator, or LP, what’s it take to attract this new tide of capital?
- Traction is non-negotiable: Growth equity is pouring into companies with live customers, high-margin use cases, and proven LTV/CAC models.
- Post-experimentation: The hardest capital to raise isn’t for demos, but for scaling production, integrating AI into legacy systems, and proving ROI at scale. Generative AI adoption alone skyrocketed among business leaders this year—from 55% to 75%.
- Talent still matters: Despite all the automation stories, human ops still make or break scaling. Experienced SaaS leaders, product architects, and vertical domain experts are filling key board seats and exec slots at every high-profile AI raise.
There’s also a marked rebalance in risk appetite. Following the turbulence and “capital drought” of 2023 (when equity financing in tech retrenched hard), there’s newfound discipline in how funds deploy checks. The stabilization in 2024 and rebound in 2025 have meant less crowded early-stage hype, and a larger tranche of dry powder for companies actually delivering on revenue and retention.
If you missed it: Our post on the liquidity crunch in growth equity and what it means for managers is a must-read as capital deployment ramps up again: https://leverventure.com/insights/lps-liquidity-the-fundraising-crunch-what-growth-equity-managers-need-to-know
Competitive Edge: Ecosystem Diversity
What separates winners from the pack in 2025? Diversity across the AI value chain.
- Technical infrastructure: Chipmakers, cloud compute, and AI ops platforms (think: Databricks, Groq) are seeing rounds reminiscent of Cloud 1.0 over a decade ago.
- Applications with moats: From finance to manufacturing to life sciences, startups that weld AI into industry-specific workflows are closing $200M+ rounds at unprecedented step-ups.
- Responsible deployment: Investors are tuning in to frameworks like Microsoft’s “safe and secure AI” commitment, using responsible rollout as a screen for defensibility and brand risk.
How Growth Equity GPs Are Recalibrating
For GPs at LeverVenture, three core themes are driving our AI plays:
- Full-stack exposure: Portfolio construction means mixing infrastructure, platforms, and sector “winners”—not betting on a single model or application.
- Operator support is everything: The best results come from working hands-on with founders on go-to-market, enterprise partnerships, and regulatory navigation.
- Cross-border deal flow: Growth equity funds with global reach are seeing prime opportunities as AI “winners” emerge in Europe, North America, Israel, and APAC—not just the Bay Area.
Our insights on cross-border AI investing are here: https://leverventure.com/insights/from-the-u-s-to-europe-and-beyond-why-cross-border-investment-strategies-are-winning-in-2025
The AI Surge: From Tools to Infrastructure
The biggest misconception in the market today is that AI is a feature. In reality, more GPs and LPs are recognizing that AI is fast becoming the infrastructure of modern business.
We’re entering a cycle where the AI-powered agent, not just the query or the workflow, becomes ubiquitous. Autonomous systems—auditing, trading, coding, recruiting, even negotiating—are now part of due diligence decks. Growth equity’s role is to spot where these shifts are transformative, not just incremental, and back companies building for autonomy and human-in-the-loop accountability.
Leading investors are layering traditional metrics (revenue, churn, NPS) with new ones: model efficiency, “explainability” in decision pipelines, robustness of AI safety protocols, and breadth of third-party integrations.
For founders and operators, this means one thing: Collect, measure, and publish adoption data. The market rewards proof, not promises.
Want to go deeper?
Our perspective on the end of “hustle culture”—and how AI is shifting startup ambition—is live: https://leverventure.com/insights/the-end-of-hustle-culture-rethinking-startup-ambition-when-ai-does-most-of-the-work
What’s Next for Growth Equity and AI
The acceleration shows no sign of slowing: With mega-rounds, new fund launches, and a maturing market structure, 2025 will be remembered as the year growth equity made its biggest bet yet on AI—across industries, stages, and global regions.
For funds like LeverVenture, winning in this cycle is about more than deploying capital. It's about building relationships, bringing operational leverage to founders, and maintaining an agile, sector-savvy stance as the next wave of AI innovation comes into focus.
Want to keep up with this rapidly evolving sector? Explore more of our AI, digital transformation, and growth equity insights at https://leverventure.com/insights/.
