Amid industry-wide concerns over the AI bubble, top technology and artificial intelligence (AI) startups are focusing on raising several rounds of funding, with each round doubling and even tripling the company’s valuation, a news portal reported. luck.
The news portal quoted Jennifer Lee, general partner at Andreessen Horowitz, as saying that raising multiple rounds of funding for AI startups can quickly become a strategic advantage for a company, or a risky liability.
Startups like OpenAI, Anthropic, Mercor, Cursor, Reflection AI, OpenEvidence, Lila Sciences, and Harmonic are among several others that raised two or more funding rounds in 2025 as market valuations skyrocketed.
When is funding a risky liability?
Back-to-back funding rounds for startups can become a dangerous burden when a company’s focus shifts from establishing the fundamentals to raising money from investors and venture capitalists.
According to news reports, Jennifer Lee said multiple funding rounds could end up in the wrong place “if the focus shifts from construction to fundraising before the foundation is established.”
Experts from a US-based venture capital firm also told the news portal that several funding rounds are beneficial if a startup company adapts its product to the right market and directs the funds to carry out its business properly.
“They (multiple funding rounds) work well when the capital directly drives product market suitability and execution,” said Jennifer Lee.
Start-ups that are established without a solid operating foundation and have a strong reputation are often at risk of industry decline.
A flurry of funding for AI startups
Artificial intelligence (AI) startups such as OpenAI, Anthropic, Mercor, and Cursor have raised several rounds of funding from investors in the lead-up to 2025, with concerns about a rampant AI bubble looming.
OpenAI, one of the biggest startups in the artificial intelligence space, hit the $500 billion valuation mark last month, up from its March 2025 valuation of $300. The company started this year at a valuation of $157 billion, raised in a funding round in October 2024.
According to a report by the news portal, OpenAI’s valuation increased by nearly $1 billion per day from October 2024 to October 2025, recording a monthly increase of $29 billion.
Mercor, an AI food chain and recruitment startup, reportedly raised a $100 million Series B round in February 2025 at a valuation of $2 billion, and raised another $350 million round in October 2025, skyrocketing the startup’s valuation to $10 billion.
Companies such as Cursor, Reflection AI, OpenEvidence, Lila Sciences, Harmonic, Fal, Abridge, and Doppel have closed more than one funding round by 2025, while other startups such as Harvey and Databricks are also reportedly in talks for a third round, the news portal reports.
This startup funding frenzy comes after a boom in 2021 when zero interest rate policies stimulated multiple rounds. Tom Biegala, founding partner of Bison Ventures, told the news portal that he feels the current market situation is nothing like 2021.
“Companies don’t raise money because they’ve made some substantive breakthrough or achieved some technological or commercial milestone,” said Tom Viegala, citing high investor enthusiasm for the easy cash flow.
This comes as market investors worry about the possibility of an AI bubble in the US, as more and more companies pour attention and money into AI investments.
Important points
- Some funding rounds for startups can become risky debts when a company’s focus shifts from establishing a foundation to raising capital.
- Startups like OpenAI, Anthropic, and Mercor are also among the companies that raised two or more funding rounds in 2025.
- This startup funding frenzy comes after a boom in 2021 when zero interest rate policies stimulated multiple rounds.
