The global venture capital market held steady in the third quarter of 2025, propped up by artificial intelligence investments, but the recovery is narrow, concentrated in big rounds and exits.
As a result, fundraising remains at decade-low levels, handing leverage to investors with dry powder, according to a first look at the quarterly PitchBook-NVCA Venture Monitor report released early Friday.
In the third quarter of 2025, 64% of venture capital deal value went into AI companies, a record percentage. Only software-as-a-service and big data, both closely linked to AI, surpassed $25 billion in total investments this year. Fueled by AI, U.S. dealmaking is on track for a roughly 8% increase in total deal count over 2024, the report says, potentially making it the third most active year in the past decade.
Exit activity in the U.S., particularly initial public offerings, was down in exit value from the second quarter but ranked as the second-highest valued quarter since 2021. Public listings, including reverse mergers, generated more value through the third quarter than mergers and acquisitions, despite mergers and acquisitions already exceeding 2024 levels.
Not surprisingly, AI had a significant influence on exit numbers. In 2025, 40% of exit value has come from AI, with notable exits from companies like CoreWeave Inc., which went public in March. The 317 exits by AI startups have already set a record, highlighting investor enthusiasm for the sector across all markets.
Through the quarter, $47.8 billion in new commitments have been raised by venture capital firms, with only 378 new funds closed. The U.S. fundraising market has remained stagnant this year due to liquidity shortages and uncertainties surrounding dealmaking.
Though numbers may be down, there is hope: PitchBook noted that ongoing capital calls fueling the AI investment surge are likely to increase pressure on funds, drawing down their dry powder. And as exit markets start to open, the added liquidity is expected to facilitate capital recycling into VC, although the added liquidity may be selective.
Europe and other regions tell a related but distinct story: AI is lifting deal value there as well, but fewer megarounds mean exits remain driven more by mergers and acquisitions than by public windows and fundraising sits at the lowest pace in a decade.
The report argues that reopening IPO markets and larger cross-border listings would be critical to restore much-needed growth capital for the continent’s scaling companies.
In Asia and Latin America, activity in the quarter was patchy. Supply chain and manufacturing plays have climbed the sector rankings even as many markets contend with tariff uncertainty, reduced liquidity and a few outsized deals accounting for most regional totals.
The key takeaways from the report for founders and limited partnerships are simple and stark: Capital is available but highly selective. Teams building genuinely differentiated AI primitives, horizontal platforms, or mission-critical vertical solutions will find buyers and favorable exits, whereas everyone else will face tighter terms and longer fundraising cycles.
Photo: Wikimedia Commons
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