AI Investments in 2025: Strategies VCs Are Using to Navigate Industry Shifts
At the end of January, the Chinese AI startup DeepSeek unveiled an advanced reasoning model called R1 that rivals the best products of OpenAI and Meta. Reportedly much cheaper, it shook the market, contributing to a historic $600 billion market value drop in Nvidia’s market value and raising many concerns and discussions, including the one about the sustainability of high-cost AI development.
AI has been making waves for a long time, however. In 2024, one out of every three VC dollars invested globally went to an AI startup. This growth is expected to continue and accelerate, with global AI investment forecasted to reach nearly €1.9 trillion by 2030. While AI funding surges in the West, DeepSeek highlights a global AI power balance shift.
As AI competition intensifies, investors must consider not only innovation but also regulatory frameworks. Recently, a fresh set of EU AI Act regulations came into force, and the UK introduced its AI Opportunities Action Plan — both key initiatives shaping how quickly AI can be adopted and scaled.
Given these shifts, how are VCs adapting their strategies? To find out, Vestbee spoke with Andrew Tymovskyi from Roosh Ventures, Andra Bagdonaite from FIRSTPICK, and Adam Kocik from J&T Ventures about how their firms are navigating the rapidly changing AI landscape and its regulations.
Andra Bagdonaite, Partner at FIRSTPICK
FIRSTPICK has steadily increased its AI exposure, with around 20% of its portfolio now AI-focused — a figure that has grown significantly over the past year. With AI poised to drive the next generation of billion-dollar companies, investors see immense opportunity. However, FIRSTPICK isn’t chasing hype. Instead, it prioritizes startups with unique technology, scalable business models, and clear market differentiation.
Valuations in AI are soaring, but we focus on fundamentals, Andra explains. A broader market correction in AI seems not just likely but necessary. Many sectors — particularly generative AI — are experiencing inflated valuations. A correction would help filter out unsustainable ventures, shifting focus back to startups with meaningful innovation and solid business models.
Beyond GenAI — Sectors Worth Looking At
AI potential is in overlooked industries. While GenAI has become saturated, the real untapped potential lies in sectors ripe for transformation — such as insurtech and logistics. “These industries don’t always make headlines, but they’re where AI can drive massive, long-term efficiency gains,” Bagdonaite highlights. By automating outdated processes, improving risk assessment, and unlocking new insights, AI-driven solutions in these spaces can create real competitive advantages.
For FIRSTPICK, the best AI investments aren’t necessarily the flashiest — but the ones that offer deep, practical value in industries that have been slow to evolve.
Regulatory Concerns
Regulation remains a double-edged sword for AI investors. While uncertainty looms, governments are stepping in to provide structure. The UK’s AI Opportunities Action Plan is one such initiative, aiming to balance rapid innovation with strategic oversight. By addressing funding gaps, talent development, and ethical AI usage, the UK hopes to create a more stable environment for AI-driven businesses.
For investors, this kind of regulatory clarity is essential. Bagdonaite sees the plan as a strong signal that the UK is serious about supporting AI innovation. “It’s good for startups, investors, and the broader tech ecosystem. It sets a strong example for other European countries to follow. For us as investors, it means a more stable environment to back ambitious founders working on cutting-edge AI,” she claims.
Yet, beyond the UK, uncertainty remains — especially in markets where AI regulations are still evolving. Investors must navigate the challenge of backing companies that thrive under shifting legal frameworks while ensuring compliance with future laws. However, regulation isn’t just about risk mitigation — AI itself is transforming access to funding and reshaping how investors assess opportunities.
AI is democratizing entrepreneurship, lowering barriers for diverse founders to bring groundbreaking ideas to market, Andra explains. It’s also changing the VC world, making funding decisions more data-driven and equitable. If used effectively, AI could level the playing field, allowing startups with strong fundamentals to shine — regardless of their background or geography.
Adam Kocik, Founding Partner at J&T Ventures
At J&T Ventures, AI is deeply embedded in the portfolio, with over 80% of their investments either AI-driven or incorporating AI-based solutions. Companies the fund invested in before 2020 initially used traditional AI and ML algorithms, but over the past two years, many have integrated advanced LLMs and cutting-edge AI capabilities. Meanwhile, J&T Ventures’ newer investments are increasingly AI-first startups.
Beyond the AI Hype
While AI dominates headlines, the VC market maintains broad coverage, with increasing investor interest in software-hardware hybrid solutions, including defense tech. As Adam explains, distinguishing true innovation from hype is critical. A rigorous analysis of product robustness, market size, and long-term trends helps separate AI solutions with real potential from those riding the trend. Reference checks and deep industry insights further clarify a startup’s viability. While AI is the largest shift of a decade, we look at sub-fields of AI where innovations are or about to happen, he adds.
The VC market has been gradually correcting itself over the past few years, yet AI valuations remain highly dynamic. As for CEE, the AI investment landscape differs from global trends, explains Kocik. The region hasn’t seen excessive valuations on the same scale as the US, making it an increasingly attractive opportunity for EU and US investors over the next five years.
Legal and Ethical Challenges in AI Adoption
As AI adoption accelerates, legal and regulatory complexities emerge as a major battleground. A key challenge is how AI-generated content and LLMs fit within existing copyright laws — a rapidly evolving space with global implications.
Meanwhile, AI-driven misinformation and deepfake proliferation demand stronger verification mechanisms. The safety of autonomous transport systems, where AI plays a crucial role, remains another regulatory focal point, with concerns over both ethical risks and cybersecurity threats.
“Despite these challenges, we believe AI’s benefits far outweigh the risks, Kocik states. — We believe that AI can play a key role in improving many aspects of our professional as well as personal lives, largely outweighing the associated negative implications of AI malpractice.”
Andrew Tymovskyi, Principal at Roosh Ventures
While AI is often perceived as a standalone sector, Roosh Ventures sees it as a foundational technology — akin to SaaS — a foundational layer of innovation with the strength to reshape many industries, from fintech and health tech to logistics and manufacturing. This cross-sector adaptability is precisely what makes AI a cornerstone of the firm’s investment strategy and thesis, with nearly half of its portfolio now AI-focused.
More Than Just a Buzzword
For the fund, it’s crucial to distinguish between genuine innovation over the hyped buzzwords. Its investment approach prioritizes technical depth, scalability, and market relevance, ensuring they back startups that leverage AI as a true differentiator rather than a superficial add-on.
A key indicator is the strength of the team. “Founders who have worked within the industry and identified a problem often demonstrate the clarity and focus needed to create impactful startups, claims Tymovskyi. — In contrast, we avoid broadly horizontal solutions that risk obsolescence as major AI models continue to evolve.”
Overvalued or Undervalued?
The broader market and economic landscape are benefiting from the transformative potential of AI, however, the AI’s rapid innovation cycle is not without its own challenges. GenAI and robotics are clearly leading the charge, and even though they may seem overvalued in the short term, their transformative potential remains undeniable. In contrast, highly specialized fields such as autonomous vehicles face slower commercialization due to regulatory hurdles and longer timelines.
For Roosh Ventures, the niche AI applications, particularly those addressing operational efficiency in sectors like logistics and manufacturing, are where the real investment opportunity lies. Despite their potential for significant impact, these sectors remain underexplored and undervalued. At the same time, the rise of open-source and proprietary AI models has fueled an influx of startups developing productivity-boosting tools and co-pilots. Yet, many of these ventures struggle to survive and scale in a market dominated by AI giants like OpenAI and Meta, which integrate similar functionalities into their broader ecosystems.