AI Funding Reveals Global Disparities and Search for Solutions
Venture capitalists often advocate for long-term investments, aiming for returns within a decade. However, the prevailing tech landscape, especially in the wake of the AI revolution, reveals a notable bias towards U.S. firms. My journey in tech reporting began at a publication aptly named Rest of World during the early pandemic period, when a surge in capital inflow allowed VCs to invest significantly in emerging markets across South and Southeast Asia, Africa, and Latin America. This trend, however, dwindled as high inflation set in.
Although global venture investments have started to rise again, the focus has shifted dramatically towards impressive AI funding rounds, predominantly benefiting U.S. companies. According to a report published by KPMG in April 2025, the U.S. claimed nearly 75% of global venture investment in the first quarter alone, underlining the geographic disparity in technology funding.
The Global Perspective from Southeast Asia
Last week, I participated in a conference organized by Fortune in Malaysia. This event coincided with a trilateral summit involving the Association of Southeast Asian Nations (ASEAN), the Gulf Cooperation Council (GCC), and China. As expected, AI dominated discussions among global governmental and economic leaders present. However, their insights contrasted sharply with the perspective commonly heard from U.S. stakeholders.
Collectively, these leaders acknowledged the urgent desire to harness AI technologies. Yet, a common refrain resonated: the lack of capital resources to mold AI according to their unique local conditions. In the U.S., news of billion-dollar funding deals in the tech sector appears almost weekly, a stark contrast to the funding realities faced by many nations within the developing world.
Energy Demand and Infrastructure Constraints
The energy demands required to facilitate the AI revolution cannot be overstated. The algorithms powering AI models, particularly in deep learning and natural language processing, necessitate considerable computational power to train and run effectively. This raises the question of whether many countries possess the infrastructure necessary to support such ambitious AI initiatives.
A key panel discussion featured Mohamed Hassan Alsuwaidi, who serves as the United Arab Emirates’ (UAE) minister of investment and the CEO of Abu Dhabi’s sovereign wealth fund, ADQ. Despite having substantial fiscal resources, Alsuwaidi candidly acknowledged the UAE’s limitations in competing directly with global superpowers like the U.S. and China regarding AI capabilities. He illustrated this with a metaphor, stating that U.S. and Chinese entities, such as OpenAI and DeepMind, are aspiring to “boil the ocean” in the data and energy domains. Conversely, smaller nations like the UAE must adopt a more strategic approach to leverage AI tailored to their specific needs.
The Sovereignty Challenge
This discourse dovetails with an increasingly vital theme in technological development: sovereignty. The pivotal question arises: how can nations maintain control and guide the evolution of AI technologies, especially when they are often developed by non-state actors operating within different political and cultural frameworks? Alsuwaidi articulated this pressing concern by emphasizing the necessity for sufficient power and energy resources as countries engage in the AI arms race.
OpenAI’s Global Engagements
Adding another layer to the conversation, OpenAI’s Chief Strategy Officer, Jason Kwon, introduced a new initiative titled AI for Countries. This aim, which henceforth targets government partnerships for building data centers and funding local startups, signifies OpenAI’s recognition of the need for international collaborations. In a notably strategic move, the UAE has been chosen as the first partner for this initiative, establishing a framework wherein OpenAI will provide technological infrastructure while local governments maintain operational jurisdiction. Kwon asserted, “We’ll provide the engine, and they’re going to be providing the steering,” hinting at the dynamic interplay between local governance and foreign technological support.
Future Built on Investments in Emerging Markets
While Alsuwaidi conveyed optimism regarding the UAE’s intent to reinvest in emerging economies like Latin America and Africa, he pointed out a significant disconnect. The disparity in risk/reward profiles for investments between developed regions, such as the U.S. and Europe, and emerging markets raises critical questions about economic viability and strategic investment. The mismatch is described as “mind-boggling,” illustrating the complexity facing investors when significantly altering the global AI landscape.
In conclusion, as nations like those in Southeast Asia exhibit an undeniable appetite for AI innovations, the persistent question endures: will they receive the necessary funding to fulfill their aspirations? Without substantial support, the AI divide may only deepen, further amplifying inequalities in technological development and economic opportunity.
Leo Schwartz
X: @leomschwartz
Email: leo.schwartz@fortune.com
Venture Deals Snapshot
- LuminX: San Francisco-based AI inventory management raised $5.5 million in seed funding.
- NavLive: London startup developing an AI-powered building site scanner raised £3.3 million.
- REplace: Tel Aviv platform for AI renewable energy development secured $2.1 million in seed funding.
Private Equity Movements
- IGEL: Acquired Stratodesk, a San Francisco-based software firm for endpoint management. Financial terms undisclosed.
- SmarTek21: Merged with IT Avalon, expanding their service offerings in financial and gaming sectors.
About the Author:
Leo Schwartz is a reporter at Fortune covering fintech, crypto, venture capital, and financial regulation.
Source: fortune