As the top technology and artificial intelligence (AI) startups focus their attention on raising several rounds of funding, with each round, the companies are doubling or even tripling their valuations amid the industry-wide fears looming over an AI bubble, reported the news portal Fortune.

Multiple rounds of AI startup funding can quickly turn out to be a strategic advantage for companies or end up as a dangerous liability, according to the news portal’s report, citing Jennifer Li, general partner at Andreessen Horowitz.

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Startups like OpenAI, Anthropic, Mercor, Cursor, Reflection AI, OpenEvidence, Lila Sciences, and Harmonic are several others which have carried out two or more funding rounds in 2025 as valuations surge in the market.

When is funding a dangerous liability?

Back-to-back funding rounds for a startup can turn out to be a dangerous liability when the focus of the company shifts from establishing its foundation to raising funds from investors and venture capitalists.

Jennifer Li said that multiple funding rounds can turn out wrong “when the focus shifts from building to fundraising before the foundation is set,” according to the news report.

The US-based venture capital firm expert also told the news portal that several funding rounds can be beneficial for a startup when they are channelling the money towards fitting their products in the correct market and properly executing their business.

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“They (multiple funding rounds) go right when the capital directly fuels product market fit and execution,” said Jennifer Li.

The startups which are built without a strong operational foundation with high valuations often risk a fall in the industry.

Back-to-back funding for AI startups

Artificial intelligence (AI) startups like OpenAI, Anthropic, Mercor, and Cursor have raised several rounds of funding from investors in 2025 amid the looming concerns over a prevailing AI bubble.

One of the biggest startups in artificial intelligence, OpenAI, marked a $500 billion valuation last month, which is up from its $300 valuation levels of March 2025. The company started off this year with a $157 billion valuation, which it raised in its October 2024 funding round.

According to the news portal’s report, OpenAI’s valuation rose nearly $1 billion per day basis between October 2024 to October 2025, marking a $29 billion rise every month.

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AI food chain and recruiting startup, Mercor, reportedly raised $100 million in its Series B round at a $2 billion valuation in February 2025, and again $350 million in its October 2025 round, which surged the startup’s valuation to $10 billion.

Companies like Cursor, Reflection AI, OpenEvidence, Lila Sciences, Harmonic, Fal, Abridge, and Doppel have finished two or more funding rounds in 2025, while other startups like Harvey and Databricks are reportedly in talks for a third round, according to the news portal’s report.

This startup funding frenzy comes after the 2021 boom, where the zero-interest rate policy fueled multiple rounds. Bison Ventures’ founding partner, Tom Biegala, told the news portal that he does not feel that the current market conditions are like what it was back in 2021.

“Companies would raise a round… not because they’ve made any sort of real progress or any technical or commercial milestones,” said Tom Biegala, citing the high investor enthusiasm riding on the effortless funding flow.

This comes amid market investors fearing a potential AI bubble in the United States as more and more companies now funnel their attention and money towards AI investment.

Key Takeaways

  • Several funding rounds for a startup can turn out to be a dangerous liability when the company’s focus shifts from establishing its foundation to raising funds.
  • Startups like OpenAI, Anthropic, and Mercor are among others which have carried out two or more funding rounds in 2025.
  • This startup funding frenzy comes after the 2021 boom, where the zero-interest rate policy fueled multiple rounds.