Why Venture Capital Is Suddenly Flooding US Rare Earth Startups

According to data cited by The Kobeissi Letter, US-based rare earth startups attracted approximately $628.5 million in venture funding last year — the highest annual total on record. The figure represents an increase of nearly 3,000% compared with 2024, underscoring how abruptly investor priorities have shifted.

The scale of private capital inflows is even more striking given what the numbers leave out. The total excludes government-led deals, including a $400 million equity investment by the US Department of Defense into MP Materials, highlighting how public and private funding streams are advancing in parallel.

Strategic push to reduce reliance on China

The investment boom is unfolding against a stark geopolitical backdrop. China currently controls an estimated 60% of global rare earth mining output and more than 90% of global refining capacity, giving it outsized influence over materials essential to semiconductors, electric vehicles, wind turbines, and military hardware.

US policymakers and investors increasingly view this imbalance as a strategic vulnerability. The rush of venture capital into domestic rare earth startups reflects a broader national effort to diversify supply chains, rebuild processing capacity, and reduce exposure to Chinese-controlled infrastructure.

As a result, US companies accounted for roughly 90% of all global venture funding directed at rare earth startups in 2025 — a dramatic concentration that highlights how capital is being deployed not just for returns, but for strategic resilience.

While building a full domestic rare earth ecosystem will take years, the surge in venture investment signals that markets are now aligned with policy goals. What was once a niche segment of the mining industry has rapidly become a focal point for investors betting on supply security in an increasingly fragmented global economy.

If current trends persist, rare earths may join semiconductors and energy storage as one of the most heavily strategic investment themes of the decade.

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