From models to studios: how AI video investment is evolving

Chloe Ladwig/PitchBook News

Billions of dollars are flowing into AI video generation, and the marketplace is conscionable getting started.

In the past 5 years, concern successful startups processing AI video and media tech has much than tripled, according to PitchBook data. Funding this twelvemonth is already astatine its highest level yet, with $5.6 cardinal invested, up implicit 43% from 2025's yearly total.

Startups gathering video-generation models person captured astir VC dollars, converging astir a clutch of well-funded companies, including Runway and Luma AI. That contention has not ended, and neither has the funding, but caller parts of the marketplace are opening to gully much attention.

This week's $75 cardinal concern successful indie movie workplace A24 by Google DeepMind is simply a wide example, with the 2 companies partnering to make AI tools for filmmakers. Google gaining entree to A24's creatives and probe signals that the marketplace is opening up beyond conscionable backing the champion video-generation tool.

"If you comparison the state-of-the-art exertion of contiguous to that of 3 years ago, the quality is honestly mind-blowing," Ziv Reichert, spouse astatine London-based VC steadfast LocalGlobe, said. "But we're inactive successful the infancy, and there's truthful overmuch much worth to capture."

A batch of worth is going to accrue successful the extremity product, not conscionable the tooling oregon bundle layer. We're similar the jeweler of the AI golden rush—we're not extracting the golden similar OpenAI oregon processing the tools similar generative code startup ElevenLabs, but taking it and delivering a large merchandise

Xavier Collins, Wonder

According to Reichert, contention among companies gathering video-generation tech is heating up, not conscionable successful Western markets. New models emerging from China are rivaling products successful the US and Europe, and incumbents are besides investing successful processing their ain AI capabilities. The exertion is becoming easier to build, and the much options determination are, the harder it is to beryllium the go-to for creators.

This marketplace world is prompting a bigger question: present that generating video is nary longer the hard part, wherever does the worth go?

Content arsenic the caller bundle

For an plus people historically intimately tied to software, studios are not an evident prime for VC investment, but they are gaining traction.

A fistful of AI-native oregon powered studios person emerged to instrumentality connected Hollywood and are raising superior from investors. Californian workplace Promise has raised backing from backers, including Andreessen Horowitz and Google's AI Futures Fund. VCs, including Atomico and LocalGlobe, invested successful London-based Wonder's $12 cardinal round.