VC Funding Landscape

The 2025 VC funding landscape is defined by a significant global surge in invested capital, primarily driven by massive AI “mega-deals” such as OpenAI's $40B round. The US continues its dominance, capturing roughly 65% of the global funding share and hosting nearly all of the largest deals. The EU maintains relative stability at approximately $12-13B per quarter but faces its lowest annual fundraising total in a decade due to fewer fund closures. Meanwhile, Asia's market shows divergent trends, with a sequential rise in Q3 2025 funding that nonetheless remains below prior-year peaks. The market is increasingly concentrated, with over half of all global VC dollars funneled into AI-related infrastructure and applications. The landscape presents a clear bifurcation: a massive influx of capital into highly favored sectors contrasts with challenges in others. Key sectors attracting investment include AI, Deep Tech, Healthcare, Defense Technology, and a $1.31T U.S. Fintech Market. While total dollar amounts are high, the number of deals has actually declined across stages, indicating intense investor selectivity and a “higher bar” for new ventures. This caution is most evident in early-stage financing, where deal volume is down and capital is increasingly focused on later-stage companies with proven potential. Consequently, the difficult IPO market has pushed founders and investors toward secondary market sales and M&A activity as primary exit strategies.

The chart below illustrates the robust growth in U.S. defense technology VC investment, which has remained resilient and grown significantly since 2015. It is on track to potentially exceed its $55 billion peak in 2021 with a projected $76 billion for the full year 2025.