Chloe Ladwig/PitchBook News Billions of dollars are flowing into AI video generation, and the market is just getting started.
In the past five years, investment in startups developing AI video and media tech has more than tripled, according to PitchBook data
Funding this year is already at its highest level yet, with $5.6 billion invested, up over 43% from 2025’s annual total. Startups building video-generation models have captured most VC dollars, converging around a clutch of well-funded companies, including Runway and Luma AI. That race has not ended, and neither has the funding, but new parts of the market are beginning to draw more attention.
This week’s $75 million investment in indie film studio A24 by Google DeepMind is a clear example, with the two companies partnering to develop AI tools for filmmakers. Google gaining access to A24’s creatives and research signals that the market is opening up beyond just funding the best video-generation tool. “If you compare the state-of-the-art technology of today to that of three years ago, the difference is honestly mind-blowing,” Ziv Reichert, partner at London-based VC firm LocalGlobe, said. “But we’re still in the infancy, and there’s so much more value to capture.” A lot of value is going to accrue in the end product, not just the tooling or software layer. We’re like the jeweler of the AI gold rush—we’re not extracting the gold like OpenAI or developing the tools like generative speech startup ElevenLabs, but taking it and delivering a great product Xavier Collins, Wonder According to Reichert, competition among companies building video-generation tech is heating up, not just in Western markets.