SAN FRANCISCO — The startup funding forecast turned suddenly tropical in May, with venture capital humidity rising to its highest levels in years and familiar investors moving back across the map like a warm front from Sand Hill Road.
Global venture funding reached $92 billion for the month, according to Crunchbase data, the second-largest monthly total on record. But before founders start putting away their umbrellas, one massive weather system deserves attention: Anthropic accounted for $50 billion of that total, or 54% of May’s global funding. In other words, much of the sunshine was concentrated over one very large AI cloud.
Still, conditions across the broader startup sector appear markedly warmer than the cold snaps that defined recent years. Active investors did not hold back in May, with the venture scene still dominated by familiar high-pressure systems including Andreessen Horowitz, Y Combinator and General Catalyst. The pattern suggests capital is circulating again, though not evenly. Seed-stage founders may see scattered showers of opportunity, while later-stage companies with credible AI exposure are standing directly under the atmospheric river.
There was also a notable microclimate forming in Denver, where Scotch raised a $20 million Series A to modernize liquor retail technology. The company is pitching an AI-native operating system for liquor store owners — an all-in-one software ecosystem aimed at a legacy retail category that has long operated under low-tech cloud cover. Its round is a reminder that investors are still willing to fund vertical AI when the use case is narrow, operational and close to revenue.
Meanwhile, defense technology is experiencing record heat. Startups in military, national security and law enforcement categories have already drawn more than $14.6 billion this year, blowing past the sector’s prior annual record. With venture capitalists beginning to eye exits, the defense sector looks less like a passing storm and more like a durable climate shift.
The labor market, however, remains partly cloudy. After a brutal April that saw 269 startups lay off 26,651 workers, layoff trackers now show far calmer conditions. But founders should keep emergency plans handy: frothy markets can evaporate quickly when one mega-round is doing this much of the watering.
