Everyone keeps asking: \u201cAre we in an AI bubble?\u201d But just as often, I hear a different question, followed by recognition: \u201cWait\u2014they raised another round?\u201d<\/p>\n
This year, a handful of top AI startups\u2014some now so large that calling them \u201cstartups\u201d feels vaguely ironic\u2014have raised not just one giant round of funding, but two or more. And with each round, the startups\u2019 valuations are doubling, sometimes even tripling, to reach astonishing new heights.<\/p>\n
Take Anthropic. In March it raised a $3.5 billion Series E at a $61.5 billion valuation. Just six months later, in September, it pulled in a $13 billion Series F round. New valuation: $183 billion. <\/p>\n
OpenAI, the startup that ignited the AI boom with ChatGPT<\/a>, remains the pace setter, fetching an unprecedented $500 billion valuation<\/a> in a tender offer last month. That\u2019s up from the $300 billion valuation it garnered during a March funding round, and the $157 billion valuation it started off this year with as a result of an October 2024 funding<\/a>.<\/p>\n In other words, in the 12 months between October 2024 and October 2025, OpenAI\u2019s valuation increased by roughly $29 billion every month\u2014almost $1 billion per day.<\/p>\n It\u2019s not just the LLM giants. Further down (but still high on) the AI food chain, recruiting startup Mercor in February raised its $100 million Series B at a $2 billion valuation\u2014and then by October raised another $350 million as the company\u2019s valuation leapt to $10 billion.\u00a0<\/p>\n Well over a dozen startups have raised two or more funding rounds this year with escalating valuations, including Cursor, Reflection AI, OpenEvidence, Lila Sciences, Harmonic, Fal<\/a>, Abridge<\/a>, and Doppel<\/a>. Some, like Harvey and Databricks, are currently reported to be in their third rounds.\u00a0<\/p>\n These valuation growth spurts, especially at a scale of billions and tens of billions of dollars, are extraordinary and raise a number of dizzying questions, beginning with: Why is this even happening? Is the phenomenon a reflection of 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 kind of thing\u2014what risks are the startups, and the broader market, taking on by raising so much capital so fast and pumping valuations up so quickly?\u00a0<\/p>\n The specter of 2021<\/p>\n To hear some industry insiders explain it, there\u2019s more to the current phenomenon than frothy market conditions. While the ZIRP, or zero interest rate policy, era that peaked in 2021 saw its share of startups raising multiple back-to-back rounds (Cybersecurity startup Wiz was valued at $1.7 billion in its May 2021 round, and when it raised $250 million in October its valuation sprung to $6 billion<\/a>), the underlying dynamics were completely different back then (not least because ChatGPT hadn\u2019t launched yet).<\/p>\n Tom Biegala, founding partner at Bison Ventures, said that he doesn\u2019t believe this is anything like 2021, when \u201ccompanies would raise a round\u2026 not because they\u2019ve made any sort of real progress or any technical or commercial milestones.\u201d Investor enthusiasm was so high and capital flowed so effortlessly back then that the perception of momentum was often enough to draw more than one round of capital in a year, Biegala said.<\/p>\n And for every successful Wiz<\/a>, there were numerous startups in the ZIRP-era that also raised two or more rounds within 12 months that have since struggled (like grocery delivery app Jokr, NFT marketplace OpenSea, and telehealth startup Cerebral).<\/p>\n Terrence Rohan, managing director at Otherwise Fund, says today\u2019s multi-round startups are demonstrating real business traction: \u201cThe revenue growth we\u2019re seeing in select companies is without precedent. In certain cases, one could argue that we are dealing with a new phenotype of startup,\u201d Rohan said via email.<\/p>\n Many of today\u2019s high-flying AI startups are putting up impressive numbers, even if we should be suspicious of ARR at this moment<\/a>. You have young companies like vibe coding startup Lovable, which went from zero to $17 million in ARR in three months, and conversational AI startup Decagon hit \u201cseven figures\u201d in ARR over its first half-year. Cursor is perhaps the most famous of all: The developer-focused AI coding tool went from zero to $100 million in ARR in one year.\u00a0<\/p>\n Felicis Ventures founder and managing partner Aydin Senkut describes the back-to-back fundings as a sign of a high velocity market where the costs of being wrong are higher than ever. \u201cThe prize now goes to those who identify and support these outliers earliest,\u201d Senkut says, \u201cbecause being in the wrong sector or too late may not just reduce returns, it may zero them out.\u201d<\/p>\n \u201cThe prize is so big\u201d<\/p>\n While broad excitement over generative AI is fueling the series of funding rounds, startups pushing the boundaries in certain verticals are among the biggest beneficiaries of the trend.<\/p>\n Cursor, the buzzy AI coding startup, finished 2024 with a healthy $2.6 billion valuation. Its valuation jumped to $10 billion in June 2025, when Cursor raised $900 million in funding. This month, Cursor announced<\/a> that it\u2019s now worth $29.3 billion, as it scooped up $2.3 billion in additional capital from investors including Accel, Thrive, and Andreessen Horowitz.<\/p>\n Harvey, an AI startup aimed at the legal industry, raised a total of $600 million in two separate funding rounds within the first six months of 2025, lifting its valuation first to $3 billion and then to $5 billion. In October, several outlets, including Bloomberg and Forbes, reported that Harvey just raised another round of funding that gives the startup an $8 billion valuation.\u00a0<\/p>\n Each is representative of their respective sectors: Both coding and legal AI are booming right now. Legal AI company Norm AI in November raised $50 million from Blackstone\u2014shortly after raising a $48 million Series B raised in March. Likewise, in coding, Lovable raised its $15 million seed round in February, followed up with a $200 million Series A at a $1.8 billion valuation by July.\u00a0<\/p>\n Healthcare and AI is also hot, with companies like OpenEvidence raising its July Series B of $210 million at $2.5 billion valuation, only to follow up in October with another $200 million at a $6 billion valuation. Abridge (last valued at $5.3 billion) and Hippocratic AI (last valued at $3.5 billion) fall into this category, as well.<\/p>\n Max Altman, Saga Ventures cofounder and managing partner, says the trend isn\u2019t simply the result of exuberant startup investors throwing money around. For some startups, rapid-fire fundraising is becoming part of the strategic playbook\u2014an effective means of taking on competition.\u00a0<\/p>\n