SINGAPORE, 03 October 2025 – Artificial intelligence startups are drawing record levels of venture capital, but senior investment executives have warned that early-stage valuations are looking increasingly frothy, raising concerns of a bubble in the fast-growing sector.
“There’s a little bit of a hype bubble going on in the early-stage venture space,” said Bryan Yeo, group chief investment officer at Singapore sovereign wealth fund GIC, during a panel at the Milken Institute Asia Summit 2025.
“Any company startup with an AI label will be valued right up there at huge multiples of whatever the small revenue is. That might be fair for some companies and probably not for others,” he added.
Record Funding Wave
In the first quarter of 2025, AI startups raised $73.1 billion globally, making up 57.9% of total venture capital funding, according to PitchBook data. The surge was highlighted by OpenAI’s $40 billion fundraising, as investors continued to race into the AI sector.
“Market expectations could be way ahead of what the technology could deliver. We’re seeing a major AI capex boom today. It is masking some of the potential weaknesses that might be going on in the economy,” Yeo cautioned.
Investor Divide Over Bubble Risks
Todd Sisitsky, president of alternative asset manager TPG, noted that while investor fear of missing out (FOMO) is fueling momentum, opinions remain split on whether the AI sector is in bubble territory.
He highlighted the sharp divergence among AI firms: some achieving $100 million in revenue within months, while others in early-stage stages command valuations ranging between $400 million and $1.2 billion per employee.
“That was breathtaking,” Sisitsky said.
