Investment in Frontier Technology Increases Year Over Year; Silicon Valley Bank Releases New Report

Rhea-AI Summary

Silicon Valley Bank's latest report reveals a 47% year-over-year increase in venture capital investment in frontier technology, driven by AI computing demands, defense innovations, and industrial automation growth. Hardware-focused VC funds received 33% of fundraising dollars, marking a 10-year high. Defense and aerospace VC investment reached $4 billion in 2024 and is projected to hit $12 billion by 2025. The report highlights that over 50% of frontier tech unicorns have secured funding in the past two years. Notable trends include increased investment in AI compute infrastructure and industrial robotics, with defense technology VC investment surpassing DARPA's annual budget since 2019, indicating a significant shift in defense innovation funding patterns.

Positive

• VC investment in frontier technology up 47% year-over-year
• Hardware-focused VC funding at 10-year high, representing 33% of total fundraising
• Defense and aerospace VC investment reached $4 billion in 2024, projected to reach $12 billion in 2025
• Over 50% of frontier tech unicorns have raised funding in last two years
• VC investment in defense tech exceeding DARPA's annual budget since 2019

Negative

• None.

Agentic AI, Defense Tech, and Industrial Automation Propelling the Sector

SAN FRANCISCO, June 10, 2025 /PRNewswire/ -- Venture Capital (VC) investment in frontier technology is up 47% year-over-year, according to the latest report from Silicon Valley Bank (SVB), a division of First Citizens Bank. AI-driven demand for compute power, VC-backed defense innovations, and rapid growth in industrial automation are driving record-setting growth for the sector. 

"Within the innovation economy, frontier tech bears the brunt of supply chain challenges," said Jack Garza, Head of SVB Frontier Technology. "However, despite economic uncertainty and potential tariffs, the sector is showing significant growth as VCs indicate strong enthusiasm for leveraging frontier tech for fundraising."

SVB defines frontier technology as cutting-edge technology powered by innovation or scientific advances, enabling the convergence of hardware and software. Sub-sectors include compute infrastructure, aerospace and defense, industrial automation, mobility, and immersive technology. Utilizing proprietary data and insights, the Future of Frontier Technology 2025 Report unpacks the current fundraising landscape, sector trends, and key growth areas within the sector.

Key findings from the report include:

• VC Fundraising in Hardware at 10-Year High: A third of fundraising dollars went to hardware-focused VC funds, representing the highest share in a decade and up from 20% in 2021.
• VCs Gaining Ground in Emerging Sectors: Total VC investment in defense and aerospace surpassed $4 billion in 2024 and is on track to hit $12 billion by the end of 2025.
• AI and Robotics Integration Dominating Budgets: VCs are strengthening their AI compute and hardware investments. With generative AI adoption gaining significant traction, investment in industrial robotics is also increasing.
• Defense Innovation Gaining More Support: Since 2019, annual VC investment in defense technology exceeded the annual budget for the Defense Advanced Research Projects Agency (DARPA), indicating a notable shift in defense innovation funding.
• Frontier tech unicorns are raising: More than 50% of frontier tech unicorns have raised funding in the last two years.

Learn More

To read the complete Future of Frontier Technology 2025 report, click here: Future of Frontier Technology 2025 Report

Silicon Valley Bank is a leader in providing market insights on sectors across the innovation economy. For the complete library of Silicon Valley Bank's signature reports, please visit Market Research Industry Trends & Insights | Silicon Valley Bank (svb.com)

About Silicon Valley Bank
Silicon Valley Bank (SVB), a division of First Citizens Bank, is the bank of some of the world's most innovative companies and investors. SVB provides commercial banking to companies in the technology, life science and healthcare, private equity, and venture capital industries. SVB operates in centers of innovation throughout the United States, serving the unique needs of its dynamic clients with deep sector expertise, insights, and connections. SVB's parent company, First Citizens BancShares, Inc. (NASDAQ: FCNCA), is a top 20 U.S. financial institution with over $200 billion in assets. First Citizens Bank, Member FDIC. Learn more at svb.com

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SOURCE Silicon Valley Bank

FAQ

What is the year-over-year growth in frontier technology investment according to SVB's 2025 report?

According to SVB's report, venture capital investment in frontier technology has increased 47% year-over-year.

How much VC investment is expected in defense and aerospace by the end of 2025?

VC investment in defense and aerospace is projected to reach $12 billion by the end of 2025, up from $4 billion in 2024.

What percentage of VC fundraising went to hardware-focused funds in 2025?

One-third (33%) of fundraising dollars went to hardware-focused VC funds, representing the highest share in a decade, up from 20% in 2021.

What are the main drivers of growth in frontier technology investment according to SVB?

The main drivers are AI-driven demand for compute power, VC-backed defense innovations, and rapid growth in industrial automation.

What percentage of frontier tech unicorns have raised funding recently?

More than 50% of frontier tech unicorns have raised funding in the last two years.