- VC investment reaches $101.05 billion across 7,356 deals
- Software sees strong growth fueled by AI momentum
- Exit activity remains sluggish
- Fundraising trends continue to favor midsized funds
- Defensetech features in three of the top 10 global deals
Explore the Q2’25 regional insights
While global VC investment fell from $128.4 billion in Q1’25 to $101.05 billion in Q2, the decline was largely due to OpenAI’s $40 billion megadeal in the previous quarter. Excluding that outlier, Q2’25 activity remained relatively strong, reflecting steady investor interest across AI, defencetech, and spacetech sectors. Factoring out this outlier deal suggests a more positive, more resilient, VC market given the market headwinds.
Global highlights of Q2'25
US market accounts for nearly 70 percent of VC investment globally
Q2’25 was a relatively strong quarter for venture capital investment in the Americas, with $72.7 billion raised across 3,425 deals. While this marked a decline from $98.5 billion and 4,048 deals in Q1, the comparison is skewed by OpenAI’s $40 billion raise in the previous quarter. Excluding that outlier, Q2 reflected sustained investor momentum — particularly in AI, defencetech, and spacetech. The US accounted for $70 billion of the Americas’ investment total — and for nearly 70 percent of all VC investment globally.
In Europe, VC investment showed resilience quarter-over-quarter, dipping only slightly from $16.3 billion across 2,358 deals in Q1’25 to $14.6 billion across 1,733 deals in Q2’25. Meanwhile, VC investment in Asia remained at near-record lows — with $12.8 billion invested across 2,022 deals in Q2’25 compared to $12.6 billion across 2,663 deals in Q1’25 — driven largely by a slowdown in China, where VC investment fell to its lowest level in over 10 years ($4.7 billion).
Despite significant headwinds and cautious investors, VC investment persists
The VC market globally continued to experience significant headwinds in Q2’25. The US’s Liberation Day tariff announcements on April 2, 2025 were particularly impactful, deepening concerns about global trade, supply chains, and industries highly exposed to tariff risks. While VC investors showed increasing caution in the face of these headwinds, they also showed keen persistence and a willingness to invest in companies in critical sectors like AI and in companies less exposed to tariff and trade risks.
Geopolitical uncertainties and tensions driving VC investment into DefenseTech and SpaceTech
AI continued to power a large wave of VC investments globally in Q2’25. The US attracted the largest deals in the space, including a $14.3 billion raise by Scale AI, a $2.5 billion raise by AI-powered defencetech Anduril Industries, $2 billion raise by AI development company Safe Superintelligence, a $2 billion seed round by Thinking Machines Lab, and a $900 million raise by Anysphere — the startup behind the Cursor coding assistant.1
In Europe, AI-focused defencetech companies raised significant rounds, including Germany-based Helsing ($683 million), Portugal-based Tekever ($500 million) and Germany-based Quantum Systems ($177 million). In Asia, China’s autonomous vehicles space continued to attract sizeable investments, including a $300 million raise by autonomous logistics vehicles firm Zelos Tech ($300 million) and a $178 million raise by mobility platform and smart mobility and robotaxi firm Saic Mobility.
During the quarter, VC investors across regions showed increasing interest in companies developing solutions for specific verticals — such as defence, health and biotech, legal services, and accounting services — particularly companies with robust plans and a roadmap that considers both current and future applications.
Trends to watch for in Q3’25
Heading into Q3’25, VC investment globally is expected to remain relatively subdued as VC investors continue to be cautious given uncertainties related to US tariff policies. Changes proposed in the new US tax bill could also drive a fresh wave of uncertainty over the next three-to-six months, particularly for global companies; should it be ratified, investors and startups will need to evaluate potential implications and incorporate them into their operations and deal-making processes.
AI is expected to remain a very hot sector of VC investment, with an increasing range of vertical solutions attracting attention. Defencetech, healthtech and fintech are also well positioned to see steady levels of investment in Q3’25, while sectors more susceptible to evolving US tariff policies could see VC investors holding back until those policies are stabilized.
Venture Pulse Q2’25
Explore the latest deals and venture capital trends through the second quarter of 2025
Explore the regional reports
1 https://techfundingnews.com/meet-cursor-how-anyspheres-mit-born-ai-startup-hit-a-9-9b-valuation-in-3-years/
2 https://finance.yahoo.com/news/etoro-surges-ipo-debut-pushing-171136855.html
3 https://techcrunch.com/2025/06/05/circle-ipo-soars-giving-hope-to-more-startups-waiting-to-go-public/
4 https://www.reuters.com/business/finance/chime-set-long-awaited-market-debut-after-864-million-us-ipo-2025-06-12/
5 https://pitchbook.com/news/articles/vcs-shoot-for-the-stars-send-space-tech-funding-on-course-for-new-record
Data presented correct as of July 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.
