Venture capital funding increased slightly last quarter as investor appetite showed signs of renewed energy, supported by continued enthusiasm for AI, a rebound in M&A activity and renewed IPO hopes.
Global startup funding reached $91 billion in Q2 2025according to Crunchbase data – an 11% year-over-year increase but a 20% quarter-over-quarter decline. Although still well below the sparkling peaks of 2021The first half of 2025 marks the strongest half for global venture capital investment since the first six months of 2022, signaling a tentative recovery in private markets.
The gains we saw, however, were not evenly distributed. North America recorded the largest increaseled by successful AI deals. In Europe, Germany has overtaken the United Kingdom as the leading venture capital market for the first time in over a decade, and in Latin America, Mexico dominates Brazil for the first time since 2012.
We also see sustained dynamic of M&A activity of startupswith venture-backed company acquisitions surpassing $100 billion in the first half of 2025 – a 155% year-over-year jump – according to Crunchbase data.
Let’s take a closer look, with eight charts from Crunchbase News’ second-quarter business reports that illustrate the top startup and venture capital trends halfway through 2025.
Mergers and acquisitions more than double as appetite for big deals grows
Crunchbase followed 918 announced global startup acquisitions in the first half of 2025an increase of 13% in the number of transactions compared to the first half of 2024.
In terms of dollar volume, the increase has been substantial, with just over $100 billion in disclosed-price startup purchases in the first half of 2025 – a staggering 155% year-over-year increase – as companies have shown a willingness to write big checks for strategic purchases, particularly in the AI infrastructure and cybersecurity categories.
Blockbuster deals in the first half included Googleis expected 32 billion dollars Ace purchase – Expected to Be Largest Startup Acquisition on Record – And OpenAIthe $6.5 billion purchase of Jony IveStarting the AI device Io.
Other first half bargains included Moving work‘ $2.85 billion acquisition by ServiceNow; accounts payable platform Meliothe sale of 2.5 billion dollars to Xero; and electronic health records software provider Modernize medicinesale of majority stake in Clearlake Capital Group at a reported valuation of $5.3 billion.
North America claims an indisputable lead, powered by AI
North America continues to be the clear leader in startup fundingrepresenting an astonishing 70% of global funding in the first half of the year.
Overall, investors invested $145 billion in seed rounds for U.S. and Canadian companies in the first six months of the year, according to Crunchbase data. This represents a 43% year-over-year gain and the highest half-year total in three years.
The U.S. AI sector has once again led the way, with nearly $90 billion of the region’s first-half total going to startups working on artificial intelligence.
MetaJune’s $14.3 billion investment in Evolving AI was considered the largest financing transaction in the second quarter. Other big deals included a $2.5 billion, Series G for defense technology unicorn Anduril IndustriesA $2 billion in funding for the startup GenAI Safe superintelligenceand a $900 million, Series C for an AI coding company Any sphere.
IPO optimism also lifted morale, with fintech companies debuting Circle And Carillon are seen as indicators of a potentially awakening exit market.
Asia and China continue to collapse despite cybersecurity and AI positives
Investments in Asia-based startups hit multi-year low in first half of 2025slightly offset by an increase in the second quarter, according to Crunchbase data.
China saw the region’s biggest drop in funding last quarter, with just $5.1 billion in reported funding. The dismal quarter comes amid a prolonged period of declining investment in startups in the country, due to factors such as a lack of IPOs and M&A exits.
Overall, venture capital funding for Asia-based startups totaled $26.2 billion in the first half, down about a third year-over-year.
Country-by-country performance was mixed: India was flat quarter-over-quarter, while Israel hit a two-year quarterly high.
Across Asia, advanced trading cycles increased slightly in the second quarter on a sequential basis, but were down more than 26% year-over-year. Startup activities, which have remained stable in recent quarters, remained stable in the second quarter.
Europe sees stable funding despite lead country shake-up
Funding for European startups plateaued quarter-over-quarter in Q2 and fell 24% from the peak in the second quarter of 2024, according to Crunchbase data.
It is worth noting that late-stage European funding has lagged and caused the continent’s share of global venture capital funding to drop from 19% in the first half of 2024 to just 13% in the first six months of this year.
Yet the second quarter saw major deals with companies in a handful of sectors, including a $1.25 billion fundraising from a Turkey-based mobile game developer. Dream gameswith other larger cycles in sectors as varied as defense, quantum computing, energy, robotics, aerospace, therapeutics, fintech and software services.
Germany has shown relative strength, overtaking the UK last quarter as the region’s largest venture capital market.
Another positive: Startup mergers and acquisitions in Europe also showed strength, totaling $7.2 billion across 172 exits in the second quarter.
Latin America strengthens thanks to Mexico
Venture financing in Latin America increased 13% quarter-over-quarter and 16% year-over-year.led by an explosion of investment in Mexico, which overtook Brazil as the region’s top destination for venture capital dollars for the first time since 2012.
Mexico’s second-quarter financing totals were led by digital banking Klarthe increase of $170 million and $127 million for Kavakwhich operates an online used car marketplace.
Other notable deals in Latin America over the past quarter include:
- 120 million dollars for New wavea startup based in Rio de Janeiro, Brazil, developing “sustainable and low-cost” technologies for the mining and metallurgical sector;
- $48 million for Chilean fintech Toku; And
- $45 million for Mexican e-commerce aggregator Merama.
Cybersecurity, AI and fintech are gaining momentum globally
Beyond geography, sector trends have highlighted the return of investor enthusiasm.
Global venture capital funding for cybersecurity jumped to $4.9 billion in second quarterpushing the first half to the highest half-year level in three years, according to Crunchbase data. Among the largest contract recipients were: Cyera (AI-enabled data security platform, $540 million), Cato Networks (cloud security provider, $359 million) and Chain guard (software supply chain security, $356 million).
Fintech posted modest gains, with global venture capital funding in the first half of 2025 up 5.3% year-on-year at $22 billion, a potential signal that investor confidence is returning after the 2023 reset. A handful of high-profile IPOs in the first six months of the year, including Circle And Carillon – could signal a reopening of exit routes and revive venture capital interest in the sector. An investor we spoke with, Camila Vieira of QED Investorssaid “there is a real sense of momentum returning, particularly in B2B infrastructure, AI-native fintech and climate-aligned financial services.”
Overall, AI remains the common thread, appearing in almost every major transaction, regardless of sectors and regions.
Looking ahead: momentum is taking shape, but caution remains
As startup mergers and acquisitions continue and IPO markets open, the venture capital rebound is showing signs of stability. But with the majority of funding growth concentrated in a single sector – AI – and dominated by a handful of large deals, the recovery also appears somewhat fragile.
Consider that nearly a third of all venture capital investments in the second quarter went to just 16 companies — many in the AI sector — that raised seed rounds of $500 million or more. Whether we’ll see the benefits of the AI gold rush trickle down to the rest of the startup ecosystem remains to be seen.
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Illustration: Dom Guzman
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