By Alberto Onetti
From venture capital to AI capital?
Silicon Valley continues to set the pace for global innovation. In 2025, scaleup investments reached $111 billion. Of that, a staggering $103.5 billion — 93% of the total — went into AI. In a nutshell, “VC investments” in Silicon Valley now essentially mean “AI investments.”
For every dollar invested in technology, 93 cents flow into AI. The artificial intelligence sector is literally gorging on venture capital.
These are just some of the findings of our latest report, “Physical AI. Shaping the Market of the New Possible,” created by Mind the Bridge alongside Crunchbase and unveiled at our latest Scaleup Summit in San Francisco earlier this month.
Whether this proves to be a bubble or a long-term global trend is still unclear. As Crunchbase News Senior Data Editor Gené Teare pointed out at the opening of the summit: “We are two to three years into a new investment cycle. Despite the billions raised by foundation model companies, we are still in the early stages of funding to AI, which will shape the next two decades.”
What is clear is that Silicon Valley is betting everything on AI. And when the world’s biggest “casino” goes all in, it’s hard to imagine the game ending any other way.
Physical AI: The next leap in the AI revolution
But within AI, there are multiple waves.
The first major wave was generative AI. After the billion-dollar rounds of OpenAI, Anthropic and Inflection AI in 2023, capital concentrated around just a handful of foundational model players.
By 2025, OpenAI ($40 billion) and Anthropic ($13 billion) alone absorbed the lion’s share of the $80 billion invested in the sector.
The lower figures of 2024 did not mark a slowdown, but rather a physiological pause after these gargantuan rounds, with players focused on scaling operations and deploying the capital already raised while waiting for the next big wave.
And that new wave already has a name: physical AI. Robots that can think, rather than simply execute preprogrammed commands, are becoming reality.
The ambition is clear: to move AI beyond the screen and into the physical world. In just nine months of 2025, scaleups in this field have already raised more than $16 billion.
Leading the way are Meta’s large-scale investment in Scale AI — a platform focused on training data for real-world applications in autonomous mobility, AR/VR and robotics — as well as Figure AI’s new $1 billion round for humanoid robotics, and Neuralink’s $650 million raise for brain-computer interfaces.
This new physical AI wave — born from the convergence of generative AI, autonomous agents and the real world — opens up an almost limitless range of industrial applications. With tens of billions of dollars already flowing into the sector, physical AI carries the promise of revolutionizing manufacturing and beyond.
If the trend holds, as I believe it will, Silicon Valley may be at the center of a new transformative cycle: from thinking machines (generative AI) to acting machines (physical AI).
AI’s heavy hitters
Generative AI scaleups account for 15% of companies but 45% of the capital invested historically in AI scaleups.
Meanwhile, the emerging physical AI vertical seems to be following a similar trajectory: 254 scaleups (9% of the total) have already absorbed 18% of all AI funding.
These dynamics highlight two key points:
- Both generative AI and physical AI are capital-intensive, high-risk/high-potential markets, where significant funding is required to achieve complex technological breakthroughs.
- The early growth of physical AI strongly suggests it may follow the same explosive trajectory as generative AI, setting the stage for the next major wave of AI-driven disruption.
Silicon Valley: A century of reinvention
Once again, Silicon Valley confirms itself as the undisputed epicenter of global innovation. Over the past century — starting with early defense-related investments in the 1930s and 1940s — it has been the cradle of groundbreaking technological transformations that reshaped the global economy: from integrated circuits and personal computers to the internet, mobile, cloud computing, social media and nowadays AI.
Brace yourself for disruption.
For more insights on Silicon Valley and physical AI, see Mind the Bridge’s reports, available for free download here.
Alberto Onetti is chairman of Mind the Bridge and a professor at University of Insubria. He is a serial entrepreneur who has started three startups in his career, the last of which is Funambol, among the five Italian scaleups that have raised the largest amount of capital. He is recognized among the leading international experts in open innovation and has wide experience in setting up and managing open innovation projects — venture clients, venture builders, intrapreneurship, CVCs — with large multinational companies, as well as advising and training on this subject. Onetti has a column on Sifted (Financial Times) and several other tech blogs.
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Illustration: Dom Guzman
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