- VC investment rises to $126.3 billion across 7551 deals
- Median late-stage valuations rebound
- Investment into AI surges powered by mega deals
- Venture fundraising remains muted year over year
- AI dominates top 10 deals, led by OpenAI’s $40 billion raise
Explore the Q1’25 regional insights
VC investment globally increased between Q4’24 and Q1’25, driven in part by a large number of $1 billion+ megadeals, including a standout investment of $40 billion in OpenAI. Other big deals included Anthropic — $4.5 billion (two closings), Infinite Reality — $3 billion, Binance — $2 billion, Groq — $1.5 billion, DayOne — $1.2 billion, and X — $1 billion.
Global highlights of Q1'25
US attracts over two-thirds of VC funding globally in Q1’25
VC investment in the Americas surged in Q1 2025, driven by a series of megadeals, while Europe saw more muted growth and Asia experienced another quarterly decline, reaching record low investment levels. Deal volume dropped across all regions, as investors remained cautious amid macroeconomic uncertainty.
The US retained its position as the top destination for VC funding, bolstered by several high-profile raises, including OpenAI’s $40 billion raise, Anthropic’s $4.5 billion raise (two closings), and Infinite Reality’s $3 billion raise in the augmented reality space. Europe ranked second in total VC investment, led by Binance’s $2 billion raise — the region’s largest of the quarter — followed by German proptech firm Reneo, which secured $624 million. Asia’s VC market remained soft, with just three deals exceeding $500 million. Singapore-based datacentre firm DayOne led with a $1.2 billion raise, followed by China’s cleantech company SE Environmental ($688 million) and India-based e-commerce platform Meesho ($550 million).
Hot AI space attracting diversity of deals across jurisdictions
AI plays continued to dominate the VC market in Q1’25. While the largest deals in the AI sector occurred in the US led, by OpenAI, Anthropic and Infinite Reality, other regions also saw robust AI investments. In Europe, AI-enabled industry solutions companies raised a number of $100 million funding rounds, including Sweden-based preventative healthtech company Neko Health ($260 million) and UK-based AI-powered video communications company Synthesia ($180 million). Asia also saw a number of significant AI-focused raises, including China-based Neolix Technologies ($137 million) and Univista ($137 million), Australia-based Harrison.ai ($111 million), Hong Kong (SAR) and Boston-based InSilico Medicine ($100 million), and India-based Spotdraft ($54 million).
Looking at the AI space more broadly, the launch of China-based DeepSeek’s R1 AI model sent ripples across the globe in Q1’25. DeepSeek’s launch was followed closely by new AI models by Chinese tech giants Tencent and Alibaba. The launch of the three models so close together — all purporting to be more energy efficient than others built to date — highlights the intense competition globally and regionally for market dominance in the large language model (LLM) space.
Geopolitical uncertainties and tensions driving VC investment into defense tech and spacetech
As competition heated up in the AI space worldwide, a number of governments made substantive moves in order to promote, encourage, and accelerate AI development. During the quarter, the US announced The Stargate Project, which aims to spend $500 billion on developing next gen AI infrastructure in the US.1
This was followed by the European Commission’s announcement of its InvestAI program2 — a plan to drive $206 billion into AI innovation, including the development of gigafactories — and France’s announcement of $112 billion in AI investment commitments.3 During the quarter, China also announced a $138 billion national venture capital guidance fund to invest in a range of priority sectors, including AI and quantum computing.4
Alternative energy continues to attract interest globally
Interest in defense tech continued to grow in Q1’25, driven by ongoing geopolitical tensions. The US saw the largest defense tech deals during the quarter, including a $600 million raise by Saronic Technologies, a $240 million raise by ShieldAI, and a $250 million raise by Epirus. Spacetech also continued to grow on the radar of investors. Japan in particular saw several deals during the quarter, including raises by ArkEdge Space ($51 million) and Interstellar Technologies ($45 million).
Trends to watch for in Q1’25
Heading into Q2’25, AI is expected to remain the primary driver of VC investment globally. Industry-focused AI solutions are likely to attract growing interest, alongside advanced robotics and enabling technologies such as LIDAR. Amid ongoing geopolitical tensions, sectors like defence-tech and cybersecurity are also projected to see increased VC activity.
However, VC investment may begin the quarter on a slower note as investors await greater clarity on the escalating global trade war and its potential economic ramifications. Global M&A activity could accelerate in Q2’25 and beyond, particularly in the AI space, as major tech companies seek to acquire promising startups before valuations rise further. The recently announced $32 billion deal for Google to acquire Israeli cybersecurity firm Wiz — announced prior to the U.S. administration’s tariff announcements — may serve as a catalyst for increased M&A activity, particularly within the cybersecurity and broader tech sectors. In the face of continued IPO uncertainty, M&A remains a compelling alternative for companies seeking strategic exits.
Venture Pulse Q1’25
Explore the latest deals and venture capital trends through the first quarter of 2025
1 https://www.cnn.com/2025/01/21/tech/openai-oracle-softbank-trump-ai-investment/index.html
2 https://digital-skills-jobs.europa.eu/en/latest/news/commission-launches-new-investai-initiative-mobilise-eu200-billion-investment-ai
3 https://www.reuters.com/technology/artificial-intelligence/details-110-billion-euros-investment-pledges-frances-ai-summit-2025-02-10/
4 https://www.reuters.com/world/china/china-set-up-national-venture-capital-guidance-fund-state-planner-says-2025-03-06/
Data presented correct as of April 16th 2025, and is subject to change.
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Francois Chadwick
Global Lead, KPMG Private Enterprise Emerging Giants, Partner, KPMG
KPMG in the U.S.
