BIS Report: Over Half of AI Funding Comes From Other AI Firms, Flagging Circular Financing Risks

The Bank for International Settlements (BIS) has released a research report revealing how heavily internalized AI industry funding has become. Between 2021 and 2025, 55.2% of investments in AI companies came from other AI companies rather than outside investors; meanwhile, AI investors themselves directed 28.7% of their deal value into AI targets. The findings, relayed by @rohanpaulai across multiple posts, have drawn attention to the sector's financing structure.

Confirmed

• Core BIS data: 55.2% of the money flowing into AI companies between 2021 and 2025 came from other AI companies.
• AI investors allocated 28.7% of their own deal value to AI targets.
• Circular deals account for a smaller share by count (around 16%) but involve very large individual amounts.

Why it matters

• With over half of funding coming from peers, AI industry valuations and financing are largely supported by companies propping each other up rather than validated by independent external capital—a setup prone to valuation bubbles.
• That BIS, an international financial stability body, is speaking out suggests regulators have begun watching the systemic risks that circular financing in AI could pose; if internal funding chains tighten, risk could cascade across AI companies.
• The pattern resembles the cross-investment structures seen in historical tech bubbles, warranting caution from investors and policymakers alike.

2026-10-03 ~ 2026-10-03 · 5 related posts

• BIS report: 55.2% of AI funding comes from AI companies themselves — rohanpaul_ai · 2026-10-03
• [source] BIS report: 55% of AI investment is circular, echoing Lucent-Nortel era risks — rohanpaul_ai · 2026-10-03

3 near-duplicate retellings: rohanpaul_ai · rohanpaul_ai · rohanpaul_ai