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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.

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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