AI’s Gold Rush

Like the 49ers of yore, venture capitalists are flocking to the promise of artificial intelligence, pouring $56 billion into the generative AI sector in 2024 alone—a 192% increase year over year, according to TechCrunch. 

That feverish funding pace could continue as the technology evolves from a focus on gen AI into new uses such as AI agents, which can automatically initiate and complete tasks. In fact, Deloitte predicts that in 2025, 25% of companies that use gen AI will launch agentic AI pilots or proofs of concept, growing to 50% in 2027.

Professor Toby Stuart agrees that agentic AI will attract VC funding, fueled by emerging AI offerings. “The new reasoning models—DeepSeek and OpenAI’s o1 pro mode and o3—will be strong foundations for AI agents, so we’ll see much more of this in 2025,” says Stuart, faculty director of the Berkeley Haas Entrepreneurship Program. 

The U.S. (particularly Silicon Valley) remains the destination for this ongoing AI gold rush, with non-U.S. startups attracting just $6 billion last year. 

The impact that China-based DeepSeek, which disrupted markets worldwide earlier this year, will have is yet to be fully known, but it shows  the sector is ripe for growth. 

“DeepSeek R1 has low inference costs relative to the proprietary offerings, and it is open weights,” says Stuart, the Leo Helzel Chair in Entrepreneurship and Innovation. “Lower costs, greater flexibility, and enhanced capabilities always drive the adoption of new technologies.”