Everyone keeps asking, “Are we in an AI bubble?” But just as often, I hear a different question, followed by an acknowledgment: “Wait, did they throw another round?”
This year, a handful of big AI startups — some of which are now so big that calling them “startups” seems vaguely ironic — have raised not just one giant round of funding, but two or more. And with each round, startup valuations double, sometimes even triple, to astonishing new heights.
Take Anthropic. In March, it raised a $3.5 billion Series E at a valuation of $61.5 billion. Just six months later, in September, it launched a $13 billion Series F round. New valuation: $183 billion.
OpenAI, the startup that sparked the AI boom with ChatGPTremains the leader, with an unprecedented record Valuation of $500 billion in a takeover bid last month. This represents an increase from the $300 billion valuation it achieved in a March funding round and the $157 billion valuation it began with this year following a October 2024 funding.
In other words, in the 12 months between October 2024 and October 2025, OpenAI’s valuation increased by approximately $29 billion each month, or almost $1 billion per day.
It’s not just the LLM giants. Further down (but still at the top) of the AI food chain, startup Mercor, which hired in February, raised its Series B by $100 million at a valuation of $2 billion, then in October raised another $350 million as the company’s valuation jumped to $10 billion.
More than a dozen startups have raised two or more rounds this year with growing valuations, including Cursor, Reflection AI, OpenEvidence, Lila Sciences, Harmonic, Fal, ShortenAnd Double. Some, like Harvey and Databricks, are currently in their third round.
These bursts of valuation growth, especially on the scale of billions and tens of billions of dollars, are extraordinary and raise a number of dizzying questions, starting with: why is this happening? Does the phenomenon reflect the strength of these startups, or the unique business opportunity presented by the AI revolution, or a bit of both? And how healthy is this sort of thing: what risks are startups, and the market as a whole, taking by raising so much capital so quickly and driving up valuations so quickly?
According to some industry insiders, there is more to the current phenomenon than just frothy market conditions. While the era of ZIRP, or zero interest rate policy, which peaked in 2021, saw its share of startups raise multiple rounds in a row (cybersecurity startup Wiz was valued at $1.7 billion in its May 2021 round, and when it raised $250 million in October its valuation rose to $6 billion), the underlying dynamics were completely different at the time (not least because ChatGPT had not yet been launched).
Tom Biegala, founding partner of Bison Ventures, said he doesn’t think it’s anything like 2021, where “companies would raise a seed round… not because they’ve made real progress or technical or business milestones.” Investor enthusiasm was so great and capital flowed so easily at the time that the perception of momentum was often enough to attract more than one round of capital in a year, Biegala said.
And for each successful Wizmany ZIRP-era startups also raised two or more rounds in 12 months and have since struggled (like grocery delivery app Jokr, NFT marketplace OpenSea, and telehealth startup Cerebral).
Terrence Rohan, managing director of Other Fund, says today’s multi-round startups demonstrate real business momentum: “The revenue growth we’re seeing in some companies is unprecedented. In some cases, one could argue we’re dealing with a new startup phenotype,” Rohan said via email.
Many high-flying AI startups are now posting impressive numbers, although you have to be wary of ARR (annual recurring income) at the moment. You have young companies like mood coding startup Lovable, which went from zero to $17 million in ARR in three months, and conversational AI startup Decagon hit “seven figures” in ARR in its first half. Cursor is perhaps the most famous of all: the AI coding tool for developers went from zero to $100 million in ARR in one year.
Aydin Senkut, founder and managing partner of Felicis Ventures, describes these back-to-back fundings as a sign of a high-velocity market where the costs of making a mistake are higher than ever. “The reward now goes to those who identify and support these outliers as early as possible,” says Senkut, “because being in the wrong sector or too late can not only reduce returns, but eliminate them.” »
As excitement over generative AI fuels the round of fundraising, startups that are pushing the boundaries in certain verticals are among the biggest beneficiaries of this trend.
Cursor, the bustling AI coding startup, ended 2024 with a healthy valuation of $2.6 billion. Its valuation jumped to $10 billion in June 2025, when Cursor raised $900 million in funding. This month, Cursor announced that it is now worth $29.3 billion, as it has raised $2.3 billion in additional capital from investors including Accel, Thrive and Andreessen Horowitz.
Harvey, an AI startup aimed at the legal industry, raised a total of $600 million in two separate funding rounds in the first six months of 2025, bringing its valuation first to $3 billion and then to $5 billion. In October, several media outlets, including Bloomberg and Forbesreported that Harvey just raised another round of funding that gives the startup a valuation of $8 billion.
Each is representative of its respective sector: coding and legal AI are currently booming. Legal AI company Norm AI raised $50 million from Blackstone in November, shortly after raising a $48 million Series B in March. Similarly, in coding, Lovable raised its $15 million seed round in February, followed by a $200 million Series A at a valuation of $1.8 billion in July.
Healthcare and AI are also hot, with companies like OpenEvidence raising its July Series B by $210 million at a valuation of $2.5 billion, only to follow up in October with another $200 million at a valuation of $6 billion. Abridge (last valued at $5.3 billion) and Hippocratic AI (last valued at $3.5 billion) also fall into this category.
Max Altman, co-founder and managing partner of Saga Ventures, says this trend isn’t simply the result of exuberant early-stage investors spending money. For some startups, rapid fundraising becomes a strategic element: an effective way to face the competition.
“What these companies are doing is very cleverly, salting the dirt for their competitors,” Altman said. Fortune. “The price is so big now, with so many people looking for it. So a really amazing strategy is to suck up all the capital, get the best money invested in your business so they’re not investing in your competitors.” Band I did that early on, it was smart: you become this force of nature that is too big to fail.
That said, this doesn’t mean that everyone who attracts massive capital is a winner waiting in the wings.
If restarting several turns quickly can be a strategic advantage, it can also become a dangerous handicap. Or, as Andreessen Horowitz general partner Jennifer Li puts it, these back-to-back fundraisers can go well or poorly.
“They work well when capital directly fuels product market fit and execution,” Li said by email. “For example, when the company uses new resources to expand its infrastructure, improve its models or meet outsized demand. »
So when do they go wrong?
“When the focus shifts from construction to fundraising before the foundation is established,” Li said.
Like a skyscraper built on unstable ground, startups that cannot sustain valuations that are too high risk a painful fall. The valuations of some hot AI startups may appear untenable (perhaps even unbalanced) in the public markets, if the startup makes it that far. The resulting recalibration manifests itself in falling employee equity values, creating talent retention and recruitment risks. Many of the biggest IPOs of 2025, such as Chime and Klarna, have driven decisive valuation declines from their 2021 highs.
In private markets, rapid rounds of fundraising can quickly become complex as founders’ stakes become diluted. And then, perhaps the biggest risk of all: that some of these overfunded startups will find themselves with sky-high burn rates that they won’t be able to reverse if times get tough and capital dries up. This can lead to layoffs, or worse.
Ben Braverman, co-founder and managing partner of Altman’s Saga, said this is ultimately a story about both the concentration of capital in AI and how venture capital firms have evolved their strategies in the wake of 2021. Venture capital has always been about the law of power — that the big winners continue to win big — but that has become especially true as venture capital firms seek more than ever the consensus favorites.
“The story of 2021 to date, on all sides of the market, is a flight to quality,” Braverman said. “It seems like venture capitalists made the same decision in the last cycle: ‘We’re going to invest the majority of our dollars in a few brands that we really trust. And obviously, that has its own consequences.’
One such consequence is that more capital than ever is flowing into a limited group of AI darlings. And even though terms are being signed at a breakneck pace today, even optimistic investors recognize that, as in any cycle, there will be winners and losers.
“In this type of environment, investors sometimes fall into the trap where they think every new AI model company is going to be like OpenAI or Anthropic,” said Biegala of Bison Ventures. Fortune.
“They’re putting big valuations on these companies, and it’s an option value for these companies to become the next OpenAI or Anthropic,” Biegala said. But, he notes, “a lot of them aren’t necessarily going to grow to those valuations…and you’re definitely going to incur losses.”
This story was originally featured on Fortune.com
