AI and defence companies dominate US growth investment

{"text":[[{"start":6.55,"text":"A handful of companies are blessed with an abundance of potential investors right now, says one founder at a New York investment firm with more than $7bn under management. “There is endless demand, an insatiable appetite, they can raise any amount of money at virtually any price.” "}],[{"start":24.25,"text":"But today’s market for venture capital funding is “a tale of two cities”, adds the co-founder, Peter Hébert of Lux Capital. The bifurcation is between companies who have defence or AI wares on offer, and those who do not."}],[{"start":38,"text":"As the wars in Ukraine and the Middle East continue and the AI hype persists, the two sectors are being heavily targeted by investors. This concentration of interest raises the question of how difficult it is for US companies overall to find funding to take them to the next level. "}],[{"start":53.95,"text":"According to venture capitalist Tom Loverro, a partner at IVP, which was an early investor in cryptocurrency exchange Coinbase and cyber security company CrowdStrike, growth begets growth. The fundamental reasons that investors like defence or AI companies is “because they are growing very quickly”. "}],[{"start":null,"text":""}],[{"start":72.4,"text":"Venture capital has always been attracted to the products that represent or facilitate shifts in technology. That was true when the internet was being built, when mobile phones and their associated technologies made their way to market, and when cloud computing emerged. "}],[{"start":88.4,"text":"There is an incentive for companies to recast themselves as central players in the AI boom to secure funding. Some have done so successfully — before its initial public offering in September 2025, fintech Klarna advertised itself as an AI-focused payments company, which paid off when it raised almost $1.4bn. "}],[{"start":109.25,"text":"A more extreme but still demonstrative pivot to AI was made by shoemaker Allbirds last week. After the struggling footwear maker said it was going to turn to AI infrastructure, its stock closed 582 per cent higher on the day. Whether the trading frenzy translates into any material growth for a renamed Newbird AI is another question.  "}],[{"start":null,"text":""}],[{"start":131.9,"text":"The tricky thing for non-AI companies looking to grow is that they have “to start defending their existence” in an AI-centric world, says Michelangelo Volpi, general partner at early stage venture capital firm Hanabi. The investor, whose firm is focused on AI, gives the example of a company that makes software for HR departments: if the business is to grow, it must ensure that AI cannot replicate its product. "}],[{"start":157.1,"text":"Then there are the complexities within the fundraising journey. Even if seed funding is found by start-ups, says IVP’s Loverro, the next step towards series A funding is difficult. "}],[{"start":168.54999999999998,"text":"To some extent, that has always been the case: seed capital is easier to pledge than series A, which is usually a higher sum and requires the time commitment that comes with joining a board and being involved with the governance of a company. But at the moment, Loverro says, the issue is heightened by the fact that “the primordial soup of seed is bigger than ever”, while the number of venture firms that raise a lot of money for companies across sectors is relatively smaller. It follows that the step from seed to series A can be fraught. "}],[{"start":null,"text":""}],[{"start":196.7,"text":"Obstacles to growth range beyond the focus on AI. In 2025, the word “uncertainty” abounded in companies’ media calls and shareholder reports. It remains apt. Investors point out that while there are a few very specific themes — such as defence — that are attractive for venture capitalists because of the tailwinds from geopolitical fluctuations, most companies are suffering. "}],[{"start":222.35,"text":"Investors and companies alike emphasise that uncertainty is toxic for growth. It is harder to launch IPOs, and it is also more difficult to return cash to investors, which makes investment less appealing. More established companies fare better, with start-ups most affected, Loverro says. "}],[{"start":null,"text":""}],[{"start":241.6,"text":"Rates matter too. “There is no comparison between term loan [rates]” in the US and Europe, emphasises Jesus Repetto, of New Jersey-headquartered luxury travel company Titanium Tours. The company is sixth in The Americas’ Fastest-Growing Companies 2026 ranking compiled by the FT and data company Statista, with a compound annual growth rate in revenue of 317.3 per cent. "}],[{"start":268.2,"text":"While Repetto’s company is cash flow positive, he sometimes takes out term loans to inject capital without diluting ownership. The interest rates on those loans are tied to the US Federal Reserve’s bank rate, which has proved stickier than many hoped it would. "}],[{"start":null,"text":""}],[{"start":283.5,"text":"Consumption patterns are also shifting, or stalled. Volpi at Hanabi gives the example of defence spending in Europe as a significant theme for investors at the moment, as a result of pressure from President Donald Trump’s administration on the continent to strengthen its own protection. "}],[{"start":301.75,"text":"Meanwhile at home in the US, high rates and a general affordability crisis are crimping consumers’ ability to make purchases in stores, or to contemplate buying homes. "}],[{"start":312,"text":"Most companies raising money are “quite nimble and agile”, Volpi says. “One way or the other, companies will increasingly figure out how to put themselves in the ‘good stuff’ category.” "}],[{"start":322.15,"text":"Until then, it appears the AI winners are taking all in the quest for growth. "}],[{"start":332.79999999999995,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1777031874_4508.mp3"}