For most of the technology era, the formula for building a high-growth company was relatively straightforward: develop a product, attract talent, raise venture capital and scale the software across as many customers as possible. The model worked because software could grow exponentially without requiring a proportional increase in physical infrastructure. A small team could build a product that reached millions of users, while capital was largely directed toward people, research and product development.

Artificial intelligence is changing that equation. The industry's growth is no longer being driven by software development alone; it increasingly depends on a physical infrastructure of compute, data centres, energy, advanced semiconductors and connectivity. Building that infrastructure requires a fundamentally different scale and horizon of investment. Five major technology companies spent more than $400 billion in capital expenditure in 2025, driven in large part by the expansion of data-centre infrastructure, and that figure is expected to increase by a further 75 per cent in 2026.

This raises a question that deserves more attention: Are we still financing the AI economy with a capital model designed for the software economy?

Venture capital remains essential, particularly for funding the ideas, talent and experimentation that drive technological breakthroughs. But venture capital alone was never designed to finance an industry whose growth increasingly depends on assets that resemble infrastructure. Building an AI data centre is fundamentally different from building a software platform. It requires land, power, chips, networks, long-term contracts and significant upfront investment, often years before the full economic return becomes visible.

The financial architecture is already beginning to evolve. As AI infrastructure becomes more capital intensive, companies are increasingly turning to a broader mix of funding, including corporate debt, private credit, strategic investment and infrastructure financing. This reflects a fundamental shift in the economics of the industry: the next phase of AI will require capital structures capable of supporting assets with long development cycles, significant upfront costs and long-term economic value. 

This is more than a financing trend. It signals a structural change in the AI economy.

As AI becomes more capital intensive, the winners may increasingly be determined not only by who develops the most capable technology, but by who can mobilise the capital required to deploy that technology at scale. That brings a much broader group of participants into the AI economy: infrastructure investors, private equity, sovereign wealth funds, energy companies, banks, technology providers and governments. Sovereign investors are already increasing their exposure to private assets and infrastructure linked to the AI boom, reflecting the growing recognition that compute and digital infrastructure are becoming strategic economic assets.

The implications extend beyond finance. Capital follows opportunity, but increasingly, opportunity will follow infrastructure. A company may have exceptional technology and world-class talent, yet still struggle to scale if it cannot secure sufficient compute, energy or access to the markets and partners required to commercialise its technology. This means that the ecosystems capable of bringing capital, infrastructure, regulation, talent and technology together will become increasingly important to the future of AI.

This is one reason the geography of the AI economy matters. The next generation of technology hubs will not simply compete to attract AI companies; they will compete to provide the conditions under which those companies can scale. Access to infrastructure and capital will become as important as access to talent, and the ability to connect those resources within a single business environment could become a significant competitive advantage.

At Innovation City Ras Al Khaimah, this broader shift is central to our vision. As AI and other emerging technologies move from experimentation into commercial deployment, the ecosystems supporting them must evolve as well. The opportunity is to create an environment where companies can establish themselves, access the infrastructure and relationships they need, and connect with the wider capital and technology networks required to scale.

The AI revolution is often described as a race between models, companies and countries. Increasingly, it may also be a race to build the financial and physical architecture capable of supporting those models at scale.

The question is therefore not whether the world will continue investing in AI. It is whether the capital structures supporting AI can evolve quickly enough to match the scale of the opportunity.

The next phase of the AI economy may require more than new technology. It may require a new way of financing the future.

• Innovation and AI

Written by

Paul Dawalibi Brand Contributor

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Paul Dawalibi is a technology entrepreneur, investor, unicorn founder, futurist and gamer, with over 25 years of venture capital and startup experience. He is currently the CEO of Innovation City, the first AI and innovation-focused free zone in the UAE, where he is building the Silicon Valley of the Middle East in Ras Al Khaimah. Paul is the host and creator of Game Changers - a groundbreaking business show on CNBC Arabia reaching 50M homes in the Middle East.