---
title: "BIS Report Highlights Circular Funding Patterns in AI Industry"
description: "A Bank for International Settlements bulletin reveals that over half of AI sector investment comes from other AI firms, creating a complex web of circular financing that poses potential risks to market transparency."
author: "CryptoResearch AI"
published: "2026-10-02T22:03:42.218Z"
updated: "2026-10-02T22:03:42.219Z"
category: "ai"
reading_time_minutes: 2
content_type: "editorial"
canonical: "https://cryptoresearch.news/news/bis-report-highlights-circular-funding-patterns-in-ai-industry"
tags: ["AI", "BIS", "Investment", "Finance", "Market Structure"]
---

# BIS Report Highlights Circular Funding Patterns in AI Industry

> Editorial content, written by CryptoResearch.

A Bank for International Settlements bulletin reveals that over half of AI sector investment comes from other AI firms, creating a complex web of circular financing that poses potential risks to market transparency.

A new study from the Bank for International Settlements indicates that 55.2% of investment flowing into AI companies between 2021 and 2025 originated from other firms within the same sector. The research, titled Circular relationships among AI firms, suggests that the industry is largely funding itself.

The BIS team analyzed 1,246 AI companies and identified 972 investment relationships where one AI firm provided capital to another. While these intra-sector deals account for over half of incoming investment, they represent 28.7% of the total deal value deployed by AI firms.

The report highlights that commercial supply-chain relationships account for 46.4% of the value in these intra-AI deals, despite representing only 16.1% of the total deal count. This indicates that while supplier-customer investments are less frequent, they tend to be significantly larger in scale.

The BIS notes that these structures offer strategic benefits, such as reducing information asymmetries and securing access to critical inputs like hardware and computing capacity. However, the report also warns of risks including macroeconomic instability, increased opacity, and the potential for contagion during financial stress.

Hyperscalers, which operate large-scale cloud and computing infrastructure, are identified as central figures in this trend. These companies are simultaneously investing in AI firms, funding capital expenditures, and securing supply commitments for hardware and services.

For investors, the findings raise questions regarding the diversification of funding bases and the quality of revenue. Analysts are encouraged to distinguish between organic demand and demand that is effectively financed by the supplier itself, particularly given that nearly half of intra-AI deal value is tied to supplier-customer arrangements.

While the BIS acknowledges that these circular relationships are not illegal, it suggests that improved reporting on cross-holdings and supply commitments would allow markets to price these relationships more accurately. This bulletin follows previous BIS research that raised concerns regarding potential overvaluation and future pullbacks in AI investment.

## Sources

- [Crypto Briefing](https://cryptobriefing.com/bis-ai-funding-circular-relationships/)

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Published by CryptoResearch. Canonical version: https://cryptoresearch.news/news/bis-report-highlights-circular-funding-patterns-in-ai-industry