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The AI Boom Is Booming: Silicon Valley’s Gold Rush, Main Street’s Cold Shoulder

Venture capital is all-in on AI, but Main Street is being left behind. Here’s why this matters more than you think.

What Happened

Artificial intelligence is dominating venture capital in America. In the first half of 2025, AI startups pulled in 64% of all U.S. VC funding, a record high. Globally, AI startups have received 53% of all venture capital funding.

This is no passing trend. It’s a full-blown reallocation of economic attention. Just a few years ago, AI made up a quarter or less of VC activity.

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The shift is being driven by massive deals, such as OpenAI’s $40 billion funding round earlier this year. But it’s also visible in smaller patterns. New funds are being created specifically to chase AI, and investors are backing founders who have almost no product or plan, just ideas and credentials.

Sectors like biotech, manufacturing, clean energy, and agricultural tech are seeing funding dry up. Capital is flowing instead to AI startups in San Francisco, New York, and Austin.

Even startups in these other sectors, despite having strong fundamentals, are being told to pivot to AI just to stay relevant in pitch meetings. This behavior resembles herd mentality more than market efficiency.

Why It Matters

This is not just about where the money is going. It’s about which futures are being funded, and which are being pushed aside.

When two-thirds of venture capital is tied up in one technology, it means less investment in other areas that support the real economy. Innovation in farming tools, energy systems, small business platforms, and local manufacturing is sidelined.

These are the areas where job growth happens, especially outside major coastal cities. If capital continues to focus only on AI, it limits opportunities for entrepreneurs building practical tools for the rest of the country.

It also creates a distorted market. The smartest minds and biggest checks are chasing just a few trends: large language models, AI search tools, and "autonomous everything."

This has national security implications too. An economy that prioritizes chatbots over supply chains is poorly prepared for long-term geopolitical pressure or internal shocks.

How It Affects You

If you’re running a business, working in a traditional industry, or trying to build something in your community, this trend affects you. It impacts your access to funding, tools, and future support.

Tech built for Main Street is now harder to finance. Products designed for practical needs are being edged out by investor hype.

You may also see the effects in the services available to you, the jobs created in your area, and the kinds of innovation that reach your region. When AI consumes the entire innovation budget, the rest of the economy gets less.

There’s also a long-term risk that the AI capital surge may not pay off. If it turns into another bubble, a real possibility, the collapse won’t just hurt venture capitalists. It will ripple through markets, retirement funds, and tech employment.

Unlike past tech cycles, this one is skipping over most of the country from the beginning.

While AI may be powerful, over-investing in a single trend while ignoring the real economy is not a recipe for broad prosperity, it’s a risk. 

But for now, it’s one regular Americans are being asked to carry without much say.