The venture capital (VC) environment in 2025 is in the throes of an evolution resulted from technological innovation, geopolitical changes, and economic policy developments. As of August 2, 2025, VC investment activity is consolidating into fewer, larger deals and the artificial intelligence (AI) vertical involves the majority of funding. This report prepared for Evolve Venture Capital (www.evolvevcap.com) summarizes and analyzes key trends in venture capital in Q2 2025: global funding trends, AI funding, and global tariff changes. We present these analyses as considerations in the “Global Trends” subcategory, designed to inform investors and startups in this rapidly-changing environment.For active VC and startup participants seeking opportunities and mitigating risks, understanding the trends listed below is important. It is our hope that by synthesizing data and expert observations, this report will add to the understanding of the current state of VC to help both identify problems and the opportunities for the remainder of 2025.
Global Venture Capital Funding Trends
Global venture capital (VC) financing was $97.2 billion across 5,336 firms in Q2 2025. This amount represents a 13% increase in financing from Q1 2025, but a 9% decrease in deals—this was the lowest amount of deals since Q4 2016. This suggests that investors are being more selective, concentrating their capital in fewer deals identified as high potential while investors express caution due to macroeconomic uncertainties.
Regional Breakdown
| Region | Q2 2025 Funding | Q2 2025 Deals | Q1 2025 Funding | Change |
|---|---|---|---|---|
| Americas | $72.7 billion | 3,425 | $N/A | +N/A |
| United States | $70 billion | N/A | $N/A | +N/A |
| Europe | $14.6 billion | 1,733 | $16.3 billion | -10.4% |
| Asia | $12.8 billion | 2,022 | $N/A | +N/A |
| China | $4.7 billion | N/A | $N/A | Lowest in 10+ years |
The Americas continue to be the focus for VC investing, especially the United States, with approximately 70% of global investment represented by the $70 billion invested in Q2 2025. Europe declined slightly in investment, dropping from $16.3 billion in Q1 to $14.6 billion in Q2, which signals this region is also experiencing caution in investor sentiment. Asia experienced a slowdown as well, where VC investment in China dropped down to $4.7 billion; the lowest in over a decade, in response to economic volatility, mixed policy and uncertainty.
This variation regionally highlights the uneven materialization of global economic conditions, trade policies and market context in informing VC flow and activity. Investors are favouring those regions with stronger opportunities for innovation, such as a Stanford outlier like Silicon Valley, while shying away from the relatively higher perceived risks of venture investing in markets and conditions with lower societal trust.
Dominance of AI in Venture Capital
AI continues to be a pillar of venture capital investment, capturing 31% of total VC funding in Q2 2025 and down from 35% in Q2 2024, but still a sizable portion. One in five venture-backed deals now involve AI and early-stage deal sizes continue to creep upward as investors continue to bet on the AI sector and its potential to drive transformative change.
Notable AI Deals in Q2 2025
| Company | Region | Amount Raised | Sector/Application |
|---|---|---|---|
| Scale AI | United States | $14.3 billion | AI Infrastructure |
| Anduril Industries | United States | $2.5 billion | AI-Powered Defencetech |
| Safe Superintelligence | United States | $2 billion | Early-Stage AI Development |
| Thinking Machines Lab | United States | $2 billion | AI Seed Round |
| Anysphere (Cursor) | United States | $900 million | AI Coding Assistant |
| Helsing | Germany | $683 million | AI Defence |
| Tekever | Portugal | $500 million | AI Technology |
| Quantum Systems | Germany | $177 million | AI Systems |
| Zelos Tech | China | $300 million | Autonomous Logistics |
| Saic Mobility | China | $178 million | Mobility Platform |
These deals demonstrate that AI is broadly appealing across regions and applications for various purposes, from AI-based infrastructure and defence to logistics and coding assistants. One significant trend amid the broader stack of AI-related deal activity is the commercialization of AI agent technology. In a December 2024 survey of over 800 organizations, 63% of organizations said AI agents were of high priority. Over 50% were organizations that were founded after 2023. Corporate venture capital (CVC) activity also highlights the strength of AI, with over 65% of CVC deals in 2024 targeting early stage AI start-ups.
A focus by the market on AI, and there will be concerns over market saturation and/or sustained high valuation assumptions, particularly for early-stage companies. Like Safe Superintelligence which raised a double unicorn valuation of $2 billion + with a mere 10 employees.
Impact of Tariff Reforms on Venture Capital
Tariff reforms, specifically the US Liberation Day tariff announcements of April 2, 2025, have created net new hurdles for the VC market. Tariff reforms have exacerbated fears about global trade and supply chains, resulting in a more conservative approach by investors. There is growing pressure and exposures to tariffs in verticals such as AI with large infrastructure costs and international business. Tariff exposures create unnecessary hurdles to growth and ultimately ruin investor confidence.
Strategies for Startups
To respond effectively to these changes in the VC market, startups should deploy a comprehensive tariff strategy, including:
- Bonded Warehouses: These defer tariff payments until a set time and lower the tax costs.
- Utilize your Free Trade Agreements: Leverage the best trade conditions in your sector.
- Smart Customs Process: Reduce tariff liabilities by working with customs on a timely and accurate customs process.
In this chaotic and uncertain investment space, founders should show expertise in their sourcing strategy, trade compliance, and tariff exposure management, to obtain an investment. Tariff strategies are critical for AI startups as infrastructure spend is paramount to scalability and profitability.
Other Notable Trends
Despite the continued dominance of AI, other segments present varying performance:
- Fintech: deal volume has reduced, now recording the lowest volumes since 2017, and is a reflection of current investor caution based on regulatory and economic uncertainty.
- Climate Tech: funding is currently being tracked at a multi-year low, but interest in sustainable solutions remains consistent.
- Defencetech, Healthtech, and Biotech: are all performing positively, especially when there is a clear roadmap for future applications.
M&A activity continues to be strong, most prominently seen in AI driven technology. Large billion-dollar deals demonstrate possible consolidation around certain areas such as AI agents and voice AI. The outlook for Q3 or 2025, suggests that VC investment is expected to stay very low thanks to the uncertainty created by US tariff policy and new relevant tax bill. There nevertheless remains an appetite from investors to back AI, defencetech, healthtech, and fintech, whilst sectors most exposed to tariffs will continue to exert investor caution.
Future Outlook
The VC landscape in Q3 2025 will probably be impacted by:
- Geopolitical Uncertainty: especially related to US tariff policies, and global trade tensions
- Selectivity in investing: focused on startups with positive fundamentals and the ability to grow
- AI momentum: continued investment in AI and agent-use within commercialisation
Startups that adapt can be better positioned if they are tackling tariff-related issues.
Evolve Venture Capital’s Role
We at Evolve Venture Capital, will be focused on the continued change in this landscape by helping to identify and support disruptive startups that embrace the international trends we are seeing. We will continue to invest in higher potential areas like AI, defencetech and healthtech, while also being deliberate in ensuring there is sustainability and resilience in dealing with economic uncertainty’s impact. We will support startups here and in the 2025 VC landscape through our work, ecosystem and process to help startups with any challenges coming from tariff exposure while identifying and pursuing opportunities surrounding expected demand in the 2025 VC environment.
Our approach involves:
- Strategic Investments: Targeting startups with sound business models and technologies that can be scaled.
- Tariff Strategies Support: Helping our portfolio companies optimize their trade compliance and overall costs.
- Creating New Technology: Supporting founders who are creating change in their industries.
Evolve Venture Capital remains dedicated to building a vibrant ecosystem where startups can thrive, contributing to the global innovation economy.
Evolve Venture Capital is still committed to creating a sustainable ecosystem supporting our startups continuing to contribute to the global innovation economy.
In 2025, the venture capital sector will be dominated by AI, precise investment strategies, and tariff reform. Investors are currently targeting high-potential areas but are also affected by global trade uncertainty that leads to an unpredictable trade environment. Startups will need to evolve again by developing a resilient strategy that will support funding and ultimately growth.
This report presents key insights for stakeholders, outlining the opportunities and challenges influencing the VC landscape in Q2 2025. By keeping an eye on market activity and adjusting accordingly, investment professionals and founders can help set themselves up for success in this exciting and evolving environment.
Sources:
1. Crowdfund Insider – Venture Capital Reports Reveals AI Dominance and Shifting Global Trends
2. KPMG – Q2’25 Venture Pulse Report – Global trends
🔗 https://kpmg.com/xx/en/what-we-do/industries/private-enterprise/venture-pulse.html
3. Deloitte – 2025 Trends in Venture Capital
🔗 https://www.deloitte.com/us/en/services/audit-assurance/articles/trends-in-venture-capital.html
