What’s new in venture capital? Update on Q3 2025 Venture Capital Trends
After three challenging years, Venture Capital (VC) funding is finally on the upswing according to data from Q3 of this year. KPMG’s Q3’25 Venture Pulse Report data shows global VC investment in Q3 totaling $120.7 billion across 7,579, deals making it the fourth consecutive quarter of “robust global growth.” With investor sentiment improving and exit windows opening again, VC investment is making a comeback.
Below, we look at some key findings from the KPMG report, as well as the Q3 State of Venture Report from CB Insights.
Global Investment Breakdown
KMPG’s report shows the Americas bringing in the bulk of global VC investment in the quarter, and the region continued to dominate late-stage funding. In fact, three of the five largest overall were US-based.
European investment was higher on a quarter over quarter basis, showing what KPMG analysts call “steady, if measured momentum in Q3.” However, Asia’s funding environment continues to be more cautious, with transactions coming in well below the mega rounds in the Americas and Europe.
A Surge in Exit Activity
CB Insights reports that mergers and acquisitions (M&A) were up 8% QoQ. With 2,324 transactions for the quarter, Q3 had the highest number of deals since Q3 2022. This surge in M&A was fueled by maturing artificial intelligence (AI) startups, as well as increased transactions in fintech and healthcare. Their data shows IPO activity jumping to 138 for the quarter (up 45%).
KMPG also highlighted the uptick in IPO activity last quarter, pointing to a four-year high for IPO exit value for the Americas. US data is particularly positive, and there were multiple companies raising more than $1 billion in US-based IPOs in Q3.
AI Dominates Funding
It is no surprise that VC investors are targeting AI companies, with KMPG noting that they are “attracting capital at scale across geographies and use cases.” Their analysts also say that the significant transactions in the AI space in Q3 highlight that AI is now consistently the defining theme in global VC, and the data backs this up.
CB Insights data shows that so far in 2025, 51% of total venture funding has been raised by AI startups, and in Q3, AI deals accounted for 23% of all transactions. This means VC investors are being selective and plowing more capital into fewer deals. If this trend holds through Q4, which it likely will, 2025 will mark the first year that AI startups have received the majority of venture funding. Their data also shows the US as the leader for AI growth, with 85% of global AI funding and 53% of deals this year.
A Look Ahead
Of course, the question on everyone’s mind now is how will Q4 play out, and what does 2026 hold? Based on the significant momentum building in the second half of 2025, we are likely to see even more robust activity this quarter and into next year, with a blip in October data reflecting the temporary slowdown triggered by federal government shutdown.
KPMG expects global VC investment to remain relatively steady as we move through Q4, again, driven by AI. They also expect exit activity to continue its growth this quarter, with even greater growth expected in 2026 coming off the improvements in the IPO market we have seen this year. One thing is for sure: the interest in and focus on AI will not be slowing down. Expect this to continue to consume the bulk of funding as we wrap up 2025 and into the new year.
