Venture Pulse Q2 2025
The Venture Pulse report provides insights around trends, opportunities, and challenges in the U.S. venture capital market.
VC investment in the US fell in Q2’25, despite several $1 billion+ megadeals, including a $2.6 billion raise by World View, a $2.5 billion raise by Anduril Industries, and a $2 billion raise by Safe Superintelligence.
Q1’25’s $40 billion outlier deal drives steepness of decline in VC investment in Q2’25
VC investment in the US declined in Q2’25, driven in part by a fresh surge of uncertainty powered by concerns over the impact of evolving tariff policies. Some VC investors chose to pull back from making major investments in sectors particularly exposed to tariff risks — such as manufacturing and durable and consumer goods — until policies get stabilized. The quarter-over-quarter decline in US-based VC investment, however, was over-emphasized by the record $40 billion raise by OpenAI in Q1’25 — a deal that exceeded the combined total of VC investment in both Europe and Asia during Q1’25.
AI continues to drive significant VC investment in the US, although frenetic pace may be slowing
AI remained a hot ticket for VC investment in the US during Q2’25; among the deals completed during the quarter, AI-powered defencetech Anduril Industries raised $2.5 billion, AI system developer Safe Superintelligence raised $2 billion, AI-empowered coding assistant company Anysphere raised $900 million, AI-native data security firm Cyera raised $500 million, and robotics firm Skild AI raised $540 million. While still an incredibly robust quarter of AI investment, Q2’25 did not have the same frenzied pace of mega-dealmaking compared to other recent quarters. This likely reflects a combination of VC investors wanting to see how specific AI-focused business models pan out and investors shifting their focus from capital-intensive model development to more emergent areas of AI, including high potential, vertical-focused solutions.
VC investors have become very familiar with uncertainty over the last few years. While the latest wave — tariffs, counter tariffs, rising tensions in the Middle East — has caused some pullback in activity in exposed sectors, the incredible robustness of other sectors, like AI and defencetech, has kept VC investment quite resilient quarter-over-quarter. Despite the headwinds, VC investors are making deals; they’re simply focusing their efforts on more proven businesses and hot sectors.
Conor Moore
Global Head, KPMG Private Enterprise, KPMG International & Partner, KPMG in the US
US IPO market sees spur of activity in later half of Q2’25, led by mature fintechs
The end of Q1’25 and beginning of Q2’25 saw significant volatility in the US stock markets, driving a number of companies to delay or postpone their planned IPO exits. Over the remainder of the quarter, however, markets stabilized and rebound relatively quickly. Several companies were quick to take advantage on this perceived sense of stability, including a number of mature fintechs. In May, Israel-based online broker and crypto-focused firm eToro raised $620 million in its IPO on the Nasdaq, giving it a $5.6 billion valuation.1 In June, blockchain-based infrastructure company and stablecoin issuer Circle raised $1.1 billion in its debut on the NYSE, with its share price jumping 168 percent in first day trading; while it is still early days, Circle’s shares have jumped considerably since its IPO.2 US-based digital bank Chime also held an IPO in June, raising $864 million in its debut on the Nasdaq.
Outside of the fintech sector, the healthtech also saw a number of solid IPOs during the second half of Q2’25; most notably, virtual physical therapy company Hinge Health raised $437 million in its IPO in May, while digital health provider Omada Health raised $150 million in its IPO in June. While the IPO activity seen in the US during Q2’25 was positive, it remained shy of predictions made in late 2024.
Fundraising activity in the US remains dry
At mid-year, fundraising by VC funds in the US was down substantially, even compared to the subdued year that was 2024. The dearth of fundraising likely reflects a combination of factors, including the uncertain market, the lack of liquidity resulting from the challenging exit environment, and the availability of lower-risk investment alternatives.
New SPACs may be positioning for future AI deals
In the first half of 2025, the US saw a number of new SPAC listings, helping buoy listing activity in the US. While SPAC mergers have not been particularly prominent in the US market over the last several quarters, the upswing in activity may reflect investors laying the groundwork for accelerating the ability of AI-focused startups to go public over the next few years.
Trends to watch for in Q3’25
Heading into Q3’25, the cautious optimism that permeated the market in Q3’24 and Q4’24 prior to the change in administration appears to have returned, particularly on the exit front. Given the successful fintech IPOs in Q2’25, other mature startups could take advantage of the perceived stability in the markets in order to head for the door — particularly in areas like fintech, healthtech, and cybersecurity. While IPO exit activity may pick-up compared to recent quarters, the uncertainty around trade policies, supply chain relationships, global demand, and both potential inflation and interest rate impacts will likely push any major resurgence in IPO activity into 2026.
AI and defencetech are expected to remain key areas of VC investment over the next few quarters. In the AI space, M&A activity is also expected to pick up as some corporates target acquisitions as a mechanism to acquire much needed AI talent and others look to bring innovative AI products into their own platforms and solutions.
Footnotes
1Klarna Announces Partnership with OnePay to Exclusively Power Installment Loans at Walmart in the U.S. | Klarna International
2Klarna files registration statement for proposed Initial Public Offering | Klarna International
The AI space globally has been very hot — and Q2’25 was no exception. What we’re starting to see, however, is a lot more focus on vertical AI companies. While big model companies are still raking in significant funding rounds, we’re seeing a lot more investment in companies focused on vertical-focused AI solutions. While defense-focused solutions attracted the lion’s share of investment in Q2’25, a diversity of other verticals have also started to see AI-focused investments — from biotech and healthtech to accounting and legal services.
Francois Chadwick
Global Lead for Emerging Markets and Partner KPMG in the US
Key insights from Venture Pulse Q2 2025
In the US in Q2’25
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Venture Pulse Q2 2025
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