It’s all happening in AI (and, yes, that’s a Simon and Garfunkel reference).
And if that’s an exaggeration, it barely feels like one: In Q3, AI amounted to 39.5% of deal count, a record, according to PitchBook. AI is sending U.S. dealmaking trends up, as PitchBook estimates that deal count is up about 8% this year, marking the third most active year of the last decade. And when it comes to deal value, the numbers are even more dominant: By Q3 2025, 64.3% of deal value in the U.S. has tracked to AI. Now, the definition of “AI” is pretty broad, but a now undeniable reality has taken hold.
“I think AI has basically become the foundation of VC,” said Kyle Stanford, PitchBook director of U.S. venture research, via email. “It provides a wholly new way for companies to solve challenges, and it is being integrated into every part of the economy. It is still the easy and fast deployment that can drive hyper scaling that VC has looked to for outsized returns. As mentioned above, it’s not a singular technology or subset of companies within a broader industry; it is becoming part of everything.”
This follows through to the much-discussed and long-suffering VC exit environment: In 2025 so far, 40% of the exit deal value also traces back to AI, among them CoreWeave’s IPO. PitchBook says 2025 has seen a record 317 AI exits. But the environment for IPOs and M&A remains dicey, according to PitchBook’s Stanford.
“Exit value is interesting because you have a few strong IPOs, and then quite a few IPOs that maybe got higher billing for the year because of the overall lack of exits,” he told
Fortune. “I don’t think many share my view on the IPO market, but I question its real strength given the relatively small pipeline…Many of the IPOs have been crypto firms or companies that might be considered atypical for the overall VC-backed inventory. I do think that the extended period staying private (over the past three years) will lead to some very strong companies listing next year.”
Whether such an over-reliance on AI is healthy for the VC industry is an open question. And of course, intertwined in that question is the ongoing debate du jour: Are we in a bubble? If we are, what does that even mean?
Stanford says he believes the conversation around a bubble should be nuanced. “This hype cycle, or bubble, might drive more tail events,” he said. “The multiples being given to some companies are very high, which might be concerning, but if this is truly the technological shift it is being billed as, then companies shouldn’t be priced in a normal way.”
A thought to this end from Brent Hill, managing partner at Origin Ventures, which just raised a $140 million sixth fund: “The U.S. economy has gone through five major economic eras: agrarian, industrial, information, digital—and now, of course, we’re living in the fifth and maybe most consequential with the artificial intelligence economy.” This ongoing phase will be massive, Hill reckons, noting that “we think that over the next ten years, we’ll see a dramatic impact in the productivity of the U.S. economy that will add somewhere between $2 trillion and $4 trillion to domestic GDP.”
There remains, of course, the question of how unprecedented VC’s all-in reliance on AI really is. We see lots of corollaries to the dotcom bubble, perhaps—but venture was a far smaller, less mature industry then. Karen Page, general partner at B Capital, thinks it’s worth considering the cloud boom.
“Cloud was a fundamental shift—a different way to own your data, to run your data,” she said. “But even so, AI is a different way to access your data. So, this is still leaps and bounds more of a transition.”
There was always, during cloud hype, a sense that brakes were getting pumped. Not so in AI: “There is no fear around AI,” Page said. “There is, instead of fear, a desire to jump in and move fast. So, it’s very different.”
All in all, she and I ultimately settled on the word “unprecedented.”
See you tomorrow,
Allie Garfinkle
X: @agarfinksEmail: alexandra.garfinkle@fortune.comSubmit a deal for the Term Sheet newsletter
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