VC investors are shifting their attention from generative AI startups to later-stage companies, new research shows, with the average deal size having tripled year-on-year to $1.5 billion.
According to EY Ireland’s latest Generative AI Key Deals and Market Insights study, global venture capital investment in generative AI surged to $49.2 billion in the first half of this year, outpacing the total for all of 2024, at $44.2 billion, and more than double the $21.3 billion total for 2023.
While the US accounts for 97% of global deal value and 62% of volume, EMEA makes up 23% of volume but just 2% of deal value.
“While there was substantial concern at the start of the year with the launch of DeepSeek that investment in GenAI was likely to trend downwards, the results for the first half of the year point to a very different scenario,” said Grit Young, EY Ireland technology, media and telecoms lead.
“We are seeing a clear pivot to less but more substantial investments, which are pointed towards more mature companies and platforms that can demonstrate they can deliver real-world impact and return on investment.”
There’s been a wave of high-value investment into some of the most established players during the first half of this year, including SoftBank’s commitment to OpenAI, which could reach $40 billion, and xAI’s $10 billion funding round.
So far this year, the industry has also seen major funding rounds for Databricks ($5 billion), Anthropic ($3.5 billion), Mistral AI ($600 million), and Harvey ($600 million).
Investor focus is shifting
Agentic AI has emerged as a key growth area, with Capgemini’s $3.3 billion acquisition of WNS and Berlin-based Parloa’s $120 million raise among the more notable deals.
The report highlights a clear shift in investor focus towards generative AI platforms offering specialized, real-world applications. Meanwhile, venture capital is increasingly flowing into companies building software on third-party foundation models, with use-cases ranging from cybersecurity to regulatory compliance.
“We would expect that the investment trajectory is likely to accelerate through the second half of the year and beyond,” said Young.
“It would appear that GenAI has skipped through the traditional ‘trough of disillusionment’ for new technology adoption quite quickly and has now moved into another upswing cycle.”
In Ireland specifically, 63% of startups are using AI and 36% are embedding it at the core of their business models, yet many AI startups are struggling with access to capital and infrastructure.
“For AI startups, the funding environment remains challenging, particularly in the €1 million to €10 million funding space. Many high-potential startups find themselves in a difficult middle ground, too advanced for early-stage support, yet not quite large enough to attract global VC attention,” said Young.
“However, Ireland has a deep and well-established pool of talented entrepreneurs, and with increased collaboration between businesses, founders, academic institutions and policymakers there are plenty of opportunities to be seized.”
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