Venture Pulse Q4 2025
The Venture Pulse report provides insights around trends, opportunities, and challenges in the U.S. venture capital market.
US venture capital investment remained resilient in Q4’25 despite significant headwinds, including an extended government shutdown and a sharp decline in quarterly deal volume. On a full-year basis, total US VC investment reached a four-year high of $339.4 billion, falling just short of the record set in 2021.
In the US in Q4’25
- VC deal value posts a solid $91.15 billion across 3,378 deals
- AI continues to attract massive deals
- Median deal size increases across all stages
- First-time financings reach new heights
- Exits continue steady climb
- LPs focus on mid-sized funds
AI continues to power VC market in the US
AI continued to dominate VC investment trends in the US during Q4’25, with the top eight deals together accounting for over $32 billion in investment. Anthropic raised the largest funding round of the quarter ($15 billion), followed by a $6.2 billion raise by Project Prometheus, a $2.3 billion raise by Anysphere, and a $2 billion raise by Reflection AI.
The breadth of value propositions by the AI companies that attracted $1 billion+ funding rounds in Q4’25 is notable-ranging from LLM-focused firms and traditional and renewable energy-backed AI infrastructure companies to startups focused on AI-enabled coding solutions, agentic AI platforms, and the development of industry solutions. This diversity highlights how rapidly the AI space is evolving and how investors are pouring their attention — and investment — into companies with transformative AI solutions or entrepreneurs they believe will be able to create them. At the same time, companies with AI wrappings have predominantly seen investment wane as VC investors have become more intentional with their AI investments.
First time financing activity improving, although late-stage deals remain a priority
The significant degree of uncertainty over the course of 2025 led VC investors in the US to remain cautious, with many prioritizing late-stage deals or holding back funding against the need to bolster their portfolio companies given the continued possibility of delayed exits. While first time financing value hit a record high in 2025 — driven primarily by large first-time financing rounds for AI startups, such as the $6.2 billion raise by Project Prometheus — the volume of first-time financing rounds was quite soft for much of the year. The tide began to turn in Q4’25, with the number of first-time financing rounds ticking up amid growing optimism for exits. As exits continue to materialize, first-time financing volume should continue to improve as capital gets reinvested in the market.
IPO door open in the US-for the right companies
Despite disruption from the US federal government shutdown in Q4’25, investor sentiment continues to suggest that the IPO window remains open for high-quality companies with durable business models and clear paths to profitability. During Q2’25 and Q3’25, several US IPOs delivered strong debuts, with robust first-day trading performance. However, post-IPO performance for many of these companies has since moderated, indicating that pent-up demand contributed to a degree of frothiness, with early trading pops not fully reflective of underlying company fundamentals.
Even so, the US IPO environment remains on an upward trajectory, with increased activity expected in the first half of 2026 as a growing cohort of IPO-ready companies move towards exit.
One key uncertainty in the IPO market is the timing and sequencing of exits by large, AI-centric companies. While the prospect of blockbuster AI IPOs is compelling, such offerings could absorb a disproportionate share of investor attention and capital, potentially crowding out demand for non-AI issuers. How and when these AI-driven exits materialize and their impact on broader IPO activity will be an important dynamic to watch over the coming year.
M&A activity shows strength in 2025 as corporates look to keep from falling behind
M&A activity in the US was notably robust in 2025, particularly in contrast to the subdued environment of 2024. A significant share of this activity was driven by large corporates increasingly favoring “buy over build” strategies, as the pace of innovation has outstripped their ability to develop solutions internally at the speed the market now demands. For many corporates, the pressure to innovate is already elevated and expected to intensify further, pointing to continued strength in M&A activity heading into 2026.
At the same time, becoming — and remaining — a public company has grown more complex, costly and uncertain, especially for businesses without proven, profitable operating models. As a result, an increasing number of startups are prioritizing high-quality M&A exits with well-capitalized acquirers over the uncertainty and execution risk associated with pursuing an IPO.
Trends to watch for in Q1’26
Heading into 2026, US venture capital investment is expected to remain strong, with AI-focused companies continuing to attract outsized funding rounds. Activity across other segments of the private capital markets is also expected to increase, as more companies favor the flexibility of remaining private over pursuing a public listing.
M&A deal value is anticipated to rise as companies across industries increasingly turn to acquisitions to accelerate innovation and mitigate the risk of falling behind. Traditional corporate venture capital investment is likewise expected to remain elevated over the coming year. IPO activity in the US is also likely to continue its recovery, supported by a sizable backlog of IPO-ready companies. In parallel, a growing number of startups are investing in IPO readiness initiatives — such as strengthening financial reporting capabilities and upskilling finance teams — in anticipation of potential public offerings in 2026 and 2027.
Looking ahead, secondary transactions are also expected to gain momentum in 2026, alongside continued use of special purpose vehicles as alternative liquidity pathways.
Dive into our thinking:
Venture Pulse Q4 2025
Download PDFQ4’25 Venture Pulse Report – global trends
A global overview of key findings uncovered from the Q4’25 Venture Pulse Report.
LinkedIn Live Event: AI Leads, IPOs Open, M&A Surges - Is VC Back?
Hear KPMG professionals discuss highlights from the latest Venture Pulse report.
About the Pulse Series
IPO Insights Q3 2025
Perspectives on the quarter’s market trends
Meet our team
Subscribe to receive the KPMG Opportunity (In)sight Newsletter
Turn insight into opportunity with unique perspectives and actionable insights addressing the burning issues atop the C-suite agenda. Delivered monthly.