The AI World in 2025

2025 ushered in the new industrial revolution—VC money everywhere, semiconductors treated like oil, and every government scrambling to regulate (or exploit) the AI build-out boom. 

The U.S. doubled down on “American Dynamism,” pouring billions into domestic chipmaking while Australia scrambles to figure out its role in this new world. We’ve got assets—cheap renewables, stable infrastructure and talent. We attract investment––Australia attracted the second-largest data centre investment globally this year, with capacity set to nearly double by 2030 and saw our first major AI acquisitions. Should we aim to become the green data centre leader or should we aim higher and play a larger role in the AI industrial transformation? 

Closer to home, the VC market is surging and splitting—Australia’s first mega funds emerge, micro-funds sprout, and the middle’s getting competitive. We’re on track to see over $5b invested in Aussie startups this year alone, but more VC funds are raising and LPs are skittish unless you’ve got cash returns.

Still, we know Aussie founders and world-class builders and we think the pre-seed and seed stages are still vastly underserved. Venture capital will continue to flow (especially more from the U.S. in 2026) into the companies who earn it. The wildcard? Policy risk. The under-16 social media ban this year was a red flag—regulate tech poorly, especially in AI, and watch investment vanish. 

In 2026 we will see how Australia positions itself in the new AI world order. With early runs on the board and the right ingredients, we're well positioned—but only if we act. We're backing the founders who share that urgency: the ones building with conviction to be the best in the world, and who won't let policy paralysis or capital caution slow them down.

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Galileo’s Year of Growth

For Galileo 2025 has been one of growth and expansion – in the team and in our incredible founders.

Julia French joined us as our newest (and 3rd) Partner. We have enjoyed building out our US presence as our portfolio companies have expanded into the US (including Andromeda, RelevanceAI, Tixel and Zendir). We have welcomed SF as our US home.

We made our 25th investment in Isaacus, an AI model building for the legal sector, marking an important milestone in our first fund. We announced the biggest single funding round with Relevance AI, an emerging global leader in enterprise A $37m Series B led by Bessemer. Followed by AI companion robot builder Andromeda's $23m Series A and secondary ticket leader, Tixel’s Series B round as both companies open US offices in SF and LA respectively.

Galileo also became the first Aussie seed VC firm to launch in SF adding an office, being hosted for our first event by Silicon Valley Bank in August and hosting the first ‘Down Under Mixer’ for SF Tech Week. 

Finally and excitingly, we announced our Breakthrough Victoria as our institutional cornerstone investor in Galileo Fund II, supporting us to back more exceptional emerging founders and launching in the new year with more to be announced soon.

At Galileo we are led by emerging founders, enabled and driven by our incredible LP community who trust us to back exceptional founders making a profound change in the world. We are privileged to be on the journey with these founders and take the earliest stages, often being the first seed VC investor, very seriously.

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What We’re Looking for in 2026

2026 will no doubt be a big year for tech startups as the AI boom continues – we ask the Galileo Partners what they’re looking to back in the year ahead:

James: For me it's all about AI specialisation. SLMs, small language models, specialised machine learning models, specialised prompts for agents from experts that know the right questions to ask, speciality workflows etc. I think there's a lot of opportunity in optimising current approaches which will see significant performance gains that can lead to a serious competitive advantage. For an example, just see our investment in Isaacus building legal AI models. 

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‍Julia: For me it’s all that bass, ‘bout that bass, no treble…Meaning big macro consumer and enterprise movement around AI, and clear adoption patterns from enterprise collaboration to consumer advertising content. Finding the clear base pattern that is repeatable with simplicity. We see this in our portfolio company SyncTech, where they have taken on insurance claim processing with key simplicity.

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Hugh: For me, I'm looking forward to seeing some of the non AI (focused/core) companies. This kind of "gold rush" moment creates opportunities in all kinds of places, and while no doubt every company is going to have some AI associated with it, I think the companies where it's on the margin (deeptech for example can come to mind) will be easily overlooked by much of the market. Overlooked often means great opportunity in venture.