Venture Capital Benchmark Q3 2025

US, Europe, and Latin America

VC Activity

Q3 maintained the strong deal values seen throughout 2025, even as overall deal volumes continued to decline. The surge in VC investment is largely driven by the increased activity in the US, as they remain the undisputed leader.

Q3 continued the trend of subdued VC fundraising in 2025, with the US still accounting for the majority of capital raised in 2025 YTD (58%).

Global Quarterly VC Exit Value Surges in Q3 Despite Decline in Exit Count.

Note for all metrics above: Mexico is included in Latin America, not North America.

Source for all VC activity: Pitchbook

M&A Trends

Quarter of the Mega-Deals: Global M&A Value Soars to 2nd-Highest Q3 on Record, While Deal Count Hits ~20 Year Low for Q3s.

Cross-border M&A is rebounding sharply, marking the biggest jump since 2021, as investors seek diversification away from U.S. listings amid rising geopolitical and regulatory risks.

Source: Reuters

IPO Trends

Q3 IPOs Extend 2025 Momentum: Global Deal Volume Rises Slightly While Placement Value Surges Above 2024 Levels.

Source: EY global ipo trends

AI Investment Trends

Although foundational model providers dominated the VC funding in Q3, we have observed a broad resurgence in Applied AI trends, with one notable example being the growing “space race” theme, where leaders such as ASTS and Starlink are adopting AI to optimize satellite constellations which intend to improve coverage and reduce latency.

Source: kpmg

Funding Concentration:

Dominated by mega-rounds for foundational model companies.

Sector Expansion

Applied AI, vertical SaaS, fintech, defense/space, and healthtech. Deep-tech areas like quantum computing and alternative energy.

AI M&A Wave in Europe

100 M&A deals among European AI startups this year, fueled by the race to develop and commercialize AI.

Key Players:

• Mistral (FR): Raised €1.7B, now prioritizing M&A.
• Domyn (IT): Seeking €1B; M&A is a "key part" of its strategy.
• H Company (FR): Acquired Mithril Security after a $220M seed round.

European Sovereignty Issue:

Soaring AI valuations lure foreign buyers, but European Governments may slam the door (Intervention to keep strategic AI firms domestic complicates their exits).

Predictions

Looking ahead, AI investment surges could be the beginning of a long-term shift rather than a short-lived bubble.

As funds run low on liquidity and channel more capital into supporting overvalued portfolio companies, we could see a cooldown in new deal activity in the coming quarters.

Founder Perspective

Ryan Hoover, Founder of Product Hunt and Founder/Investor at Weekend Fund, explains the increasing accessibility of AI infrastructure, inspiring an explosion of experimentation and launches.

Ecosystem Builder Perspective

María Dancausa, product manager at TheVentureCity, describes the approach to building a GenAI product focused on leveraging current market trends.