[News] AI Ignites Global VC and Startup Boom: Energy and AI Emerge as Dual Engines for Propelling Taiwan’s Innovations

Fueled by the generative AI (GenAI) boom, global VC has emerged from the shadow of the 2021 bubble burst, with worldwide funding now overwhelmingly concentrated on AI startups. This concentration of capital has reached a fever pitch, driven by technological breakthroughs in multimodal AI, agentic AI, and physical/embodied AI, alongside the widespread rollout of industry-specific AI applications.

Global Tech Startup Landscape and VC Trends

Following the onset of the COVID-19 pandemic in 2020, governments and enterprises worldwide championed digital transformation, sparking an investment frenzy in cloud migration, SaaS, remote work, virtual meetings, mobile payments, e-commerce, and logistics systems. However, as overly bullish markets began to cool in 2021, the global VC sector experienced a market correction and bubble burst. This prompted a shift toward a more conservative and rational investment approach. Metrics such as business models, cash flows, and profitability became the new golden rules, while actual revenue and cost structures served as the primary benchmarks for determining target valuations.

PK Tseng, Senior Research Manager at TrendForce, has pointed out that OpenAI’s launch of ChatGPT in 2022 reignited the market. Venture capitalists, who had previously grown cautious, began aggressively pouring capital back into the AI sector. As AI has emerged as the primary battleground for startups worldwide, the global VC landscape has undergone distinct structural changes.

AI Startups Nearly Monopolize VC Funding

The most prominent trend today is that AI has undeniably become the core focus of global VC investment; present-day funding is almost entirely monopolized by AI startups. According to India’s English-language daily newspaper The Economic Times, citing financial data and analysis firm PitchBook, over half of all global VC funding in 2025 has been absorbed by AI startups. In the US, a staggering 64% of VC funding has flowed into AI companies.

Data platform Crunchbase echoes this observation, reporting that AI investments account for 50% of total global funding in 2025 (reaching US$202.3 billion), a significant leap from 34% in 2024 (US$114.0 billion).

These funded startups span the entire AI technology stack. This includes AI foundation models (e.g., LLMs, multimodal AI, and world models), the AI application layer (e.g., AI coding, marketing, and healthcare), and AI infrastructure (e.g., AI chips, GPUaaS, AI data centers, and AI factories).

Vertical, Sector-Specific AI Applications Begin to Flourish

“AI is going vertical” has become a popular catchphrase, with sectors such as healthcare, law, finance, manufacturing, logistics, real estate, and construction all developing industry-specific AI solutions. Not only are more AI startups emerging to focus on specific industry scenarios—such as medical diagnostics, insurance claims, ad generation, and factory optimization—but “vertical super apps” have also surfaced, catering to the unique needs of various industries better than general GenAI models.

According to a research report by market intelligence firm Market.us, the global vertical AI market is projected to reach approximately US$115.4 billion by 2034. This represents a massive surge from US$12.9 billion in 2024, reflecting a CAGR of 24.5%.

Taiwan is also influenced by this global trend. According to the “2025 Taiwan Startup Ecosystem Survey” jointly published by PwC Taiwan and the Taiwan Institute of Economic Research (TIER), an impressive 70% of local AI startups focus on vertical sectors. These startups primarily target industries with established data accumulation, such as marketing and advertising (32%), healthcare (30.4%), and logistics and transportation (19.3%).

Capital Concentrates on Large Financing Rounds, Benefiting a Few Select AI Companies

According to observations by the World Intellectual Property Organization (WIPO), global venture capital is witnessing a phenomenon where total investment amounts are rising while the number of deals is declining. Consequently, with the increase in mega-rounds and a decline in smaller investments, capital is becoming highly concentrated, creating a one-sided, “winner-takes-all” dynamic.

AI startups not only absorb the vast majority of VC funding, but the scale of each AI funding round is also trending larger. Mega-rounds exceeding US$500 million to US$1 billion have become commonplace in the AI sector. According to Barron’s, single fundraising rounds for OpenAI and Anthropic reached staggering figures of approximately US$110 billion and US$30 billion, respectively.

Tech Giants Ramp Up Startup Investments, Boosting the Influence of CVC

Tseng stated that a growing number of tech giants and major global enterprises—including NVIDIA, Microsoft, Amazon, and Google—are investing heavily in AI and industry startups. These investments are driven by strategic goals, such as building specialized ecosystems, acquiring cutting-edge technologies, and laying the groundwork for future M&As. This trend has elevated the influence of corporate venture capital (CVC) to an all-time high.

When it comes to AI startup investments, NVIDIA, Microsoft, and Amazon have all made big moves. For instance, both Microsoft and NVIDIA have invested in OpenAI. Microsoft alone has poured tens of billions of dollars into the startup, deeply integrating its technology into Azure and Copilot. Meanwhile, NVIDIA leverages its investments to anchor its AI ecosystem, forging a symbiotic relationship with computing power and model developers. Additionally, Amazon has invested billions of dollars into Anthropic, closely tying the startup to its AWS platform.

Tech giants have made even more extensive investments across other industries. Please refer to the table below for detailed investment cases.

▲ Overview of Tech Giants’ Investments in Startups Across Various Industries (Source: Compiled by TechNews)

Rapid Rise of Defense Tech Startups

Tseng has noted that escalating global geopolitical crises and risks—driven by the Russia-Ukraine war, the US-China trade and tech disputes, and recent US-Iran conflicts—have prompted governments and startups to prioritize national security. This shift has spurred investments in defense technologies, such as AI military planning platforms, drone combat systems, military satellites, and AI-driven military analysis. Consequently, defense tech has rapidly emerged as a widespread trend over the past three years, even igniting a defense tech VC craze in Silicon Valley.

According to data compiled by PitchBook and provided to Defense News, investments in defense tech startups hit a record high in 2025, surpassing US$49.1 billion, up from US$27.2 billion for the previous year. Similarly, data from market intelligence platform CB Insights shows that equity financing for defense tech startups surged significantly in 2025, reaching US$17.9 billion compared to US$7.3 billion in 2024.

Riding this trend, AI military planning platform Onebrief has emerged as a unicorn. According to a report by Business Insider, the startup completed a US$20 million series C funding round led by Battery Ventures in June 2025. This brought its total capital raised to over US$120 million and pushed its valuation past the US$1 billion mark.

In Taiwan, Tron Future Tech secured a nearly NT$1 billion tender for a counter-drone system. The company also received capital injections from Taiwania Capital and CID Group. Additionally, US defense startup Anduril signed an MOU with the National Chung-Shan Institute of Science and Technology (NCSIST) mid-last year. In 2025, Anduril raised a massive US$2.5 billion in a single funding round, pushing its valuation to US$30.5 billion.

ESG and Sustainability Drive a Boom in Climate and Energy Tech Startups

Driven by net-zero emission policies, surging AI-related power consumption, and energy security concerns, energy and climate technologies have emerged as the next major battleground for startups. Today, energy startups are primarily concentrated in areas such as advanced batteries, hydrogen energy, nuclear fusion, carbon capture, power grid technologies, and energy solutions for AI data centers.

This trend is particularly pronounced in Taiwan. According to the “2025 Taiwan Startup Ecosystem Report” by business acceleration platform Dream Rich, Taiwan now boasts 10,028 startups. Energy and sustainability companies make up the largest share. This sector is also the top priority for the island’s corporate venture capital (CVC). It leads the CVC investment “iron triangle” by capturing 20.30% of investor focus, followed by healthcare (13.37%) and hardware (13.14%).

Tech Startup Landscape and VC Trends in Asia and Taiwan

Startup funding in Asia is primarily concentrated in a few key countries: China, India, Singapore, Israel, Japan, and South Korea. These markets are defined by their massive scale, rapid growth, and strong government support. While Taiwan’s startup ecosystem is relatively small by comparison, it boasts unparalleled advantages in sectors such as semiconductors, ICT hardware, the IoT, and deep tech.

Compared to Silicon Valley venture capitalists—who often chase high-risk, high-growth opportunities—Asian investors tend to be more conservative. They focus heavily on revenue generation, viable business models, and clear timelines to profitability. The region’s standout startup sectors include e-commerce, fintech, and super apps, with household names like ByteDance, Grab, Sea Limited, and Coupang leading the pack.

▲ Overview of Asia’s Representative Startups (Source: Compiled by TechNews)

Although located in Asia, Taiwan possesses a unique startup culture and VC logic. Taiwan-based investors strongly prefer hardware, manufacturing, and B2B sectors, while remaining relatively cautious toward pure software or “cash-burning” models.

Besides AI, the sectors targeted by Taiwan-based startups are largely intertwined with the island’s existing supply chains, such as semiconductors, ICT hardware, and IoT. Representative startups include Appier, Gogoro, and 91APP.

▲ Overview of Taiwan’s Representative Startups (Source: Compiled by TechNews)

However, the broader Asian market has faced recent headwinds. According to KPMG’s “Venture Pulse Q1 2025” report, VC investments in Asia plummeted to US$12.93 billion in the first quarter of last year—its lowest level since 2015. This decline was largely attributed to a lack of landmark, large-scale funding deals.

In contrast, Taiwan’s startup investment landscape presents a different picture. According to the “2025 Taiwan Startup Ecosystem Report” by Dream Rich, total funding reached a record high of US$3.34 billion across 605 deals in 2024. From 2015 through the first quarter of 2025, cumulative startup investments in Taiwan hit US$18.95 billion.

The report categorizes Taiwan’s AI startup investments from 2015 through the first half of 2025 into three major areas: AI infrastructure, cross-industry applications, and vertical industry applications. Vertical AI emerged as the hottest segment, attracting US$1.036 billion. This was followed by cross-industry AI applications (US$633 million) and AI infrastructure (US$452 million). These figures highlight how Taiwan is actively leveraging its ICT strengths to implement tangible AI solutions across diverse industries.

From Follower to Pioneer: A Golden Decade for Taiwan’s Startups

As AI transitions from virtual algorithms to physical and vertical applications, Taiwan is capitalizing on its deep semiconductor roots and manufacturing prowess. The island is evolving from a mere participant in the global supply chain into a driver of both AI innovations and the energy transition.

Tseng believes the biggest advantage for startups in Taiwan is combining hardware and software. The island is building strong competitive advantages in challenging sectors like sustainable energy, smart manufacturing, and defense tech. This sets the stage for a golden decade. Taiwan will no longer just participate in the AI boom. Instead, the island’s startups will be shaping the future of smart living.

(Header image source: Shutterstock.)