      drive.google.com · 2025-12-18
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The State of AI Report: December 2025

Battery Ventures' State of AI Report analyzes the explosive growth of AI-driven value creation, with AI companies representing 50% of S&P 500 value and adding $18T in market cap since November 2022. The report provides operational best practices for AI-native companies, including wedge-based market entry, AI-specific KPIs (5x-10x ARR growth, 130%+ NDR), and value-based pricing models, while detailing the emerging AI infrastructure stack from foundation models to applications.

14 metrics· Cited 0× in the knowledge base ·Open source ↗

Metrics in this report

AI Beneficiaries EV/NTM Revenue Multiple

18.6x

median 2025

Public companies with AI narrative vs. 4.6x for SaaS 1.0

AI Deal Funding Concentration

64percent

YTD 2025

AI deals as percentage of total VC funding

AI-Native ARR Growth Target

5-10x

target

Early-stage AI companies vs. 2-3x for SaaS 1.0

AI-Native Burn Ratio Target

2.0x

maximum

AI-native companies

AI-Native CAC Payback

12months

maximum target

AI-native companies vs. 12-18 months for SaaS 1.0

AI-Native Gross Margin

20-40percent

target range

Early-stage AI applications

AI-Native NDR Target

130percent

minimum best-in-class

AI-native companies

Cloud Provider Revenue Growth Rate

29percent YoY

Q3 2025

AWS, Azure, GCP combined

Foundation Model Time to $10B ARR

2.5years

OpenAI actual

Foundation models vs. legacy platform incumbents

Open Source Model Token Market Share

70percent

2025E

Open models vs. 2% in 2024

Post-AI SaaS S&M as % Revenue

30-40percent

target

AI-native companies

Pre-AI SaaS S&M as % Revenue

50-60percent

benchmark

SaaS 1.0 companies

Pre-IPO Valuation Multiple

10.0x forward ARR

illustrative

AI-native companies approaching IPO

Series B Valuation Multiple

49.4x forward ARR

illustrative

AI-native companies