- 21 hours ago
The AI boom is entering a new phase. Early excitement around large models is now giving way to a deeper race for the infrastructure and applications that make AI work in the real world. From the chips and energy systems powering massive data centers to the rapid rise of specialized AI applications across industries, the geography and priorities of investment are shifting fast. Governments, venture capital, and tech giants are all competing to fund the next layer of the AI economy. This opening keynote explores where capital is flowing across the AI stack, from computing power and infrastructure to vertical applications, and what these investment patterns reveal about the next phase of the AI revolution.
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00:03Good morning, everyone. Hope you're doing well. So my name is Naylan Patel. I'm a director of
00:09research at PitchBook in London, and this session is going to focus on AI's boom. Where are investments
00:16going and why? Before we get started, can I get a quick show of hands? Who has heard of PitchBook?
00:22Who currently uses PitchBook? Okay, a handful of you. So for those of you not familiar with PitchBook,
00:28we are a research and data provider covering specifically PE, VC, and M&A. We acquired
00:34LCD to add private credit data to our offering a couple of years ago, and we were acquired by
00:39Morningstar in 2016. So moving on to the presentation today and what I want to tell you with regard to
00:47headlines, we've got some regions, companies, opportunities, and risks with regard to AI. I see
00:53a few cameras in the audience. Don't worry, we've got QR code at the end to download the entire
00:57presentation to get high-quality slides, so don't worry about taking photos. And this is a chart we
01:05like to show audiences to kick things off and set the scene. And what we like to show is annual
01:12deal
01:12activity, and here we've got the blue bars representing annual deal activity within AI on a global scale.
01:20And we look at 2026, and that is just one quarter's figure. So $255 billion has been invested within the
01:27AI space so far in Q1. You compare that to 2025, and it was $254 billion. So within one quarter,
01:34we've already set a new record in terms of global AI investment within the VC space. Absolutely ridiculous
01:40numbers. And here's the same chart, but on a quarterly basis. Here I've removed the numbers just to really show
01:47you the scale at which capital deployment has increased. We've got the blue bars representing
01:5210, 50, maybe 100 billion on a quarterly basis, but Q1 2026, we've had over 250 billion invested
02:00across the globe. So AI really has boomed when you talk about those deal values and deal sizes.
02:05It'll be interesting to see what Q2 shows as well. We're going to get that data in a couple of
02:10weeks,
02:10but there's already been a number of large transactions in Q2 as well, so we're excited to see what happens
02:14in July.
02:16And then thirdly, the final headline figure that I want you to take away from this presentation is that
02:2180% of all VC dollars are now in AI globally. So if 100 billion is invested globally in VC,
02:2880 billion of that is going into AI startups on a global basis. That has risen pretty sharply over the
02:35past few years. It was, as you can see from this trend line, it was around about 10%, increasing to
02:40about
02:4020% in 2023. And then we've seen a really, really sharp increase in investment, and that coincided
02:47with LLMs, OpenAI, Anthropic launching. We've also got the 35% figure there as well, looking at deal
02:53count. So 35% of all transactions within the VC space are for AI companies. We're definitely seeing
03:00a lot more activity within AI, as you're fully aware. So we've looked at the headlines, now looking at the
03:07regions that are driving this. So taking the previous chart that we had, the 80% figure on a
03:12global basis, and breaking it out by region, we found that 89% of all invested dollars in North
03:18America are now within the AI space. So effectively, the VC ecosystem, or the largest one in the world,
03:23is now an AI ecosystem. A lot of capital has been flooding into the US space, is leading regionally in
03:29terms of the proportion of AI compared to the overall VC activity. You can see the other regions here,
03:34and you can also see the exponential growth. So it was around about 33% in 2022, and it has
03:42increased gradually and exponentially to increase to 89% in Q1 2026. So really, really strong growth
03:49there, particularly in the last few years. Now stripping out the US, which is by far the leader in
03:56terms of amount of capital and proportions, Europe is the best of the rest. So we've currently got around
04:0261% of European VC deal activity is within the AI space. Again, you look back to the previous years,
04:09you can see it was hovering around 20-30%. We've nearly doubled in the last quarter or so. So a
04:15lot
04:15of capital is flowing into these companies, particularly early stages as well, and the late
04:19stage, we're seeing record amounts of capital in terms of deal sizes and valuations occur within Europe.
04:25We've also got some of the other regions there as well, Asia, Latin America, and rest of the world,
04:29all kind of moving upwards.
04:34So we've looked at headlines, we've looked at the regions. Now I want to look at the companies that
04:38are driving some of these record statistics across the globe. And this is a chart taken from our AI
04:44VC trends report that we publish on a quarterly basis. And we've got semiconductors, autonomous machines,
04:51horizontal platforms, and vertical applications. And I want to draw your attention firstly to the
04:564,666 number there. That is the number of transactions taking place in the vertical application
05:02segment. Very, very high in the last 12 months. And then also horizontal platforms, the blue bar,
05:08299 billion in the last 12 months have been invested into horizontal platforms. What are horizontal
05:14platforms? They are your large language models, your chat GPTs. They are infrastructure that is used
05:19across consumers, businesses, sectors, different business units within businesses as well. So it's
05:26your new Google search, things like that across the entire economy. Vertical applications, we're looking
05:31more at a vertical alignment within a sector, healthcare, financial services, software. So we've seen
05:38enormous amount of growth within those horizontal platform investments. Diving a layer deeper into the
05:45sub-segments within those segments. There's a lot of green on this chart. What I want to draw your eyes
05:51to is the AI core bucket, 264 billion invested in the last year and trailing 12 month period. We've also
05:59got a lot of green towards the deal counts as well. So related to the previous chart where we're seeing
06:04increases in that deal count for vertical applications, that's to do with AI and financial services, AI and
06:10healthcare, AI and IT as well. So a lot of green, a lot of increasing investments. So more deals taking
06:17place, more capital being invested. And what I would say is that the increase in deal activity
06:21is probably going to reflect in larger deal values in 12 to 24 month period, because a lot of smaller
06:26companies are obviously getting funded in those vertical applications at the moment. And what we're
06:31seeing in AI core is probably what took place in AI core a couple of years ago. We're seeing a
06:35lot of
06:35companies be funded in that space, increasing deal counts. And now we're seeing the result of that with the
06:39larger valuations and larger companies in the market. And here are some of the names driving
06:46those figures. You know, you should have all heard of open AI and Anthropic. If you haven't,
06:51you're probably living under a rock. But ultimately deal size, 122 billion, absolutely enormous. I think
06:58we've only crossed that figure in the whole of Europe twice. So, you know, raising in excess of 100
07:04billion across the entirety of the European ecosystem. So for one company to close that in one single
07:08round is absolutely ridiculous. Valuation of 852 billion, probably a little bit higher now.
07:14We've got Anthropic, which has raised about 90 billion in recent months, a valuation approaching
07:19nearly a trillion. So we've got very, very large players skewing these figures upwards. And these
07:24are the drivers of those record figures. We've got a few players really, really driving things upwards.
07:28A few of the other valuations and round sizes there for you as well.
07:33And then when we compare to Europe, there's always the debate between how do we bridge the gap between
07:37the US and Europe. But we are still growing in Europe. We just tend to see smaller deal sizes,
07:43smaller valuations. And that is just part of the ecosystem in Europe. So we see smaller deals, smaller
07:48valuations. And as a result, we don't see the amount of activity that we do see in the US.
07:55So moving on to the opportunities. So I've talked about the investment rates and the deal value rates.
08:02Here, we're looking at global AI VC exit activity. And this paints a story of what's happened over the
08:09past decade or so with regard to the whole of VC. We saw a glutton activity in 2021 in terms
08:15of VC exit
08:16activity across the globe, conducive market conditions, post-COVID boom. Since then, we've seen a decline in
08:21exit. So there's been a lack of distributions, lack of LP returns, lack of fundraising as well.
08:27Fast forward to Q1 2026. And that figure there, 299 billion is basically ex-AI's acquisition by
08:33SpaceX for 250 billion. You strip that out and it's been a pretty quiet quarter. So we're already seeing
08:38some of the AI exits take shape and create liquidity within VC, which is a good thing for VC. It
08:44mints new
08:45millionaires. We get serial founders. We get VC firms generating a lot of capital in their returns.
08:50And that frees up capital to be recycled into new funds and fund the next batch of startups.
08:55So we're already seeing signs of exit activity pick up with some of those large transactions.
09:00We also had SpaceX IPO the other day. Anthropic and OpenAI have also listed, well have not listed yet,
09:07but have filed for IPO and will potentially list in the next 12 months. So this is a chart looking
09:11at exit
09:12value broken out by type. And you can see 2021, we had a lot of listings, a lot of value
09:16generated from public
09:17listings, 2026 acquisition led because of ex-AI. We could see over a trillion in exit value if those
09:24two big boys do decide to list in the next 12 months. So a very, very exciting time for IPOs,
09:30VC-backed companies,
09:31and the AI space. It's not just IPOs though that are driving exit value. Big tech firms are keeping it
09:39on AI.
09:39They do not want to be replaced by a new kind of nascent emerging company that is growing at a
09:46rapid
09:46rate. Here are some of the biggest tech firms in the world and no real surprise that they are among
09:51the top 10 strategic acquirers of AI companies. So if you're an AI builder or AI startup, you're not just
09:57looking for an IPO. You may be bolted into Apple software or Nvidia or Meta. So the big companies are
10:03still keeping abreast of AI. Again, another really positive thing for VC, which has had a very tricky few
10:08years. So exit opportunities and a lot of deal value at the moment within AI. And finally, the risks.
10:17So could I get a quick show of hand who thinks we're in a bubble with regard to AI? Okay.
10:24I can see
10:25maybe two hands. Okay. Who thinks things are going to increase, keep on increasing in the next 12 months
10:29in terms of valuations activity? Okay. So the audience probably think more things are going to increase.
10:34So yes, that's probably valid. These models are being used a lot. And I guess the point here I was
10:41trying to make is, you know, we saw the dot-com bubble, we saw the GFC, we saw the post
10:44-COVID boom,
10:45but I think everyone in this room is using AI. I think food delivery platforms boomed in 2021 because
10:50of COVID-19, but then kind of didn't really grow since because we went back to normal. So I do
10:54think
10:55that AI is slightly different to previous booms within the VC space. Another point is not everyone
11:01is going to survive. So hands up who thinks AI is going to improve job opportunities.
11:09Okay. It's a fair few people. Hands up if you think it's going to decrease job opportunities.
11:15Okay. Probably a fair split there. We probably don't know how it's going to impact job opportunities
11:19moving forward. But we're in the phase of capital deployment. So a lot of companies are getting
11:24funded. A lot of companies are receiving capital and not all of those companies are going to survive.
11:29That 80%, 90% of startups fail. So we do think that that's potentially a issue down the line when
11:35we
11:36when we come to consolidation within the AI space. The third point is, can we rely on it? So hands
11:42up if
11:42you check outputs from the AI LLMs that you use. Yeah. Okay. So a fair few people. Hands up if
11:50you don't
11:50check it and you just kind of use it straight away. Okay. One person. So yes, I think most of
11:56us probably
11:56do check those outputs. The question is, can we rely on it? I don't know if we can right now.
12:02Will that
12:02change in 12 months time? The models are getting a lot better very, very quickly. I think considering how
12:07things have developed over the last 12 months, the deployment and the improvement is very,
12:11very drastic. So we'll see how that looks. And then finally, a huge opportunity. Who thinks AI is
12:16a better opportunity or greater opportunity than the invention of electricity? Okay. One or two.
12:23What about the internet? Okay. A few more smartphones. We think AI is bigger than smartphones.
12:30Okay. Quite a few more people. So, okay. Yeah, it's probably, it's probably in the realms of those,
12:34I would say, developments. We're seeing a lot of activity. It's touching many, many sectors
12:40within economies. So we do believe it is a huge opportunity, no doubt. There's a lot of investment
12:45and a lot of companies, large valuations, everyone is using it, is going to revolutionize
12:49a lot of things. So that concludes the presentation. Thank you for listening. Here is the QR code that
12:55I promise. So if you take a photo of that, you should be able to download the slide deck. I'll
13:01leave that
13:01up there for a few minutes. So with that, thank you very much. I hope you enjoyed the presentation
13:11and have a good rest of your day.