After two correction years, venture capital is stabilizing in 2025, though not evenly. Global funding accelerated into 2025 on the back of a handful of mega-rounds and an overwhelming tilt toward AI, while deal counts remain constrained versus the 2021 peak. CB Insights estimates that Q1 2025 hit roughly $121B, the strongest quarter since Q2 2022, helped by a single giant AI raise, with Q2 2025 again clearing the $90B mark even as deals fell to their lowest since 2016. This is the new normal: fewer deals, bigger checks, and capital concentrating in categories seen as “must own,” particularly AI and compute infrastructure.
Crunchbase puts the 2024 global total near $314B, slightly above 2023, setting a base from which 2025 is trending up. Q1 2025 alone rose 54% year over year and 17% quarter over quarter, signaling renewed risk appetite at the very top end of the market. But the recovery is uneven, and most founders feel it in longer diligence cycles and stricter proof points.
The AI Gravity Well: Majority Share and Mega-Rounds
AI isn’t just a hot sector; it’s the center of gravity for venture flows. Statista estimates that AI-related startups captured about 71% of U.S. VC in Q1 2025, up from 45% in 2024 and 26% in 2023. CrunchBase’s running tally shows AI companies had already raised around $118B as of mid-August 2025, surpassing all of 2024, driven by a mix of traditional VCs, Big Tech, and alternative capital. In short, the biggest funds are heavily overweight in AI, particularly model infrastructure, data centers, inference/accelerators, and AI-native vertical applications.
This concentration also explains why total funding can rise while deal counts fall:AI mega-rounds pull in enormous checks from crossover investors and corporates, masking softness in non-AI categories and earlier stages. The implication for founders outside AI is clearly to tie your product to measurable AI leverage or prove superior unit economics and defensibility.
Healthtech AI Wave Is Selective but Strong
Digital health is another beneficiary, but selectively. Rock Health reports that AI-enabled startups captured a majority of U.S. digital health VC for the first time in H1 2025 (about 62%), with AI rounds averaging an 83% premium to non-AI peers. The biggest funding buckets were non-clinical and clinical workflow automation, plus data infrastructure areas where AI can remove bottlenecks and reduce costs. Even with overall healthcare fundraising under pressure, AI-first healthtech shows durable momentum.
That said, Silicon Valley Bank’s mid-year review shows total U.S. healthcare VC fundraising trending toward its weakest year in a decade, reinforcing that capital is demanding clearer clinical evidence, reimbursement visibility, and regulatory pathways unless your solution demonstrably improves workflow and outcomes via AI.
Climate Tech: Mixed Signals and a Shift to Non-Dilutive Capital
Climate tech remains strategically important but cyclical. PwC’s late-2024 analysis marked a 29% drop in climate financing year over year (to $56B over the last four quarters measured), and 2025 H1 data show further softness, down roughly 19% versus H1 2024. However, there are bright spots: clean power deal counts hit record highs in 2024, and investors increasingly use non-dilutive tools (grants, project finance) to back capex-heavy deployments. Funds continue to support “de-risked” themes like solar, grid, storage, and efficiency, especially where AI-driven demand for power and optimization creates new economics.
Investor pulse checks also point to sustained interest in mature clean-energy plays and battery materials even as moonshots face higher bars. Translation: big funds haven’t abandoned climate; they are moving up the TRL curve and blending venture with infrastructure-style capital.
Deep Tech & Compute: From Europe to the U.S., Bigger Bets Earlier
“Future of compute” is another magnet. European deep-tech reports show robust 2024-2025 equity flows into semiconductors, robotics, and quantum, with larger late-stage checks being scarce but earlier, technically risky rounds getting done when teams are world-class. In the UK, for example, deep-tech equity rose in 2024 despite fewer deals, and across Europe, deep tech accounts for roughly a third of VC in some analyses. The strategic takeaway: if you’re building foundational tech, raise with clear technical milestones and a commercialization path; capital is available but discriminating.
Geography: U.S. Dominance, Asia’s Divergence, and the Gulf’s Rise
The U.S. still anchors the largest, highest-value rounds and a reopened (if selective) IPO window. Multiple sources show the U.S. leading high-value VC deal flow in H1 2025, with AI and frontier compute as key drivers and several marquee listings reopening exits. This bolsters later-stage appetite and LP confidence.
Asia is more nuanced. KPMG notes Q2 2025 VC investment in Asia was subdued, among the lowest in a decade, while Crunchbase highlights China’s drag and relatively steadier momentum in India (e.g., logistics) with Q2 around $3.2B. Southeast Asia continues to reset: multiple trackers show H1 2025 funding down sharply year over year and VC fundraising at multi-year lows, even as late-stage activity flickers back to life in select geographies.
Meanwhile, the Middle East is actively shaping venture flows. Sovereign wealth funds (PIF, Mubadala, ADIA, and QIA) have become pivotal limited partners and co-investors, channeling billions into AI, data centers, and semiconductor supply chains and supporting regional startup ecosystems through giant tech events and funds. Global SWFs deployed a record $136B in 2024, with Gulf funds taking a leading share and ramping digital/AI allocations. Expect more co-investment, corporate partnerships, and sovereign-linked mega-projects to soak up capital in 2025-2026.
Stage Dynamics: Later-Stage Concentration, Fewer First Checks
At the stage level, capital keeps tilting to later rounds and “winners,” while first-time financings are scarce relative to 2021. U.S. Venture Monitor data shows constrained new-company formation and persistent bias toward follow-ons, especially in capital-intensive AI infrastructure and compute, while female-founded companies’ share of deal value and count slipped from 2021 highs, underscoring the need for intentional pipeline building. For new teams, this means pre-seed and seed can still be clear but with sharper milestones, tighter rounds, and a path to revenue or clear platform leverage.
Exits & Liquidity: Green Shoots (But Mind the Gap)
IPO activity is not “back,” but it’s back enough to matter. The improvement in Q1-Q2 2025 funding coincides with a few high-profile listings and larger secondary transactions, which help recycle capital and reprice late-stage assets. Still, many unicorns from 2020-2021 remain in valuation purgatory, and crossover funds are selective. Founders should budget for longer private horizons and consider structured rounds or secondary components when negotiating terms.
What This Means for Founders in 2025–2026
- Anchor to AI or efficiency: If you’re not an AI company, demonstrate how AI improves your offering’s unit economics, accuracy, or speed. The premium for AI-enabled solutions is real, especially in healthtech and enterprise software.
- Follow power & compute: The cascade from AI into semiconductors, data centers, and grid upgrades is massive. Startups enabling data center efficiency, energy procurement, thermal management, or chip-adjacent tooling are squarely in the flow of funds.
- Blend capital stacks in climate: Pair venture with non-dilutive sources and project finance. Investors are rewarding deployable tech over speculative science.
- Geography matters: Fundraising odds improve if you can tap U.S. lead investors or sovereign-linked co-investors in the Gulf for AI/infra themes. Local traction still matters, but your cap table strategy can be global.
- Prepare for fewer, larger rounds: Build plans around milestone-based financings with extended runway. Show concrete progress on enterprise contracts, regulatory clearances, or technical benchmarks to win in a concentrated market.
Big funds in 2025 are flowing to AI and compute-adjacent infrastructure, selective healthtech (especially workflow automation), and de-risked climate/energy plays, with the U.S. leading mega-rounds and the Middle East’s sovereigns emerging as force multipliers. Asia is mixed, India is steadier, China is soft, and Southeast Asia is still resetting. The pattern is consistent across sources: fewer deals, bigger checks, and a premium for technologies tied to data, power, and productivity. Align to those currents and design your round strategy accordingly to rise on the right side of the trend.
