With VC investment totaling $120.7 billion across 7,579 deals in Q3 2025, this quarter stands out not only for the scale of investment but also for the thematic concentration around AI.

The KPMG Venture Pulse Q3 2025 Report: Global Trends, Insights, and Implications

by ChatGPT-4o

The KPMG Private Enterprise Venture Pulse Q3 2025 report delivers an incisive overview of the global venture capital (VC) landscape, capturing macroeconomic signals, sectoral momentum, and geographical disparities. With VC investment totaling $120.7 billion across 7,579 deals in Q3 2025, this quarter stands out not only for the scale of investment but also for the thematic concentration around artificial intelligence (AI), a rekindled IPO market, and heightened geopolitical influence on capital deployment.

I. Key Findings and Trends

1. AI Dominance as the Engine of Global VC Activity

AI continues to be the defining force of VC capital flows:

• Anthropic ($13B), xAI ($10B), and Mistral ($1.52B) led the quarter’s mega-rounds, with AI startups accounting for nearly every top 10 deal.

• Investment extended beyond foundational model companies to applied AI firms in fintech (Ramp), customer support (Sierra), legal tech (Blue J), and web development (Lovable), as well as AI infrastructure (Databricks, Cerebras).

This breadth of AI investment across geographies and verticals suggests investors see AI as a general-purpose technology reshaping industries, platforms, and national strategies.

2. IPO Market Reopening Provides a Vital Liquidity Signal

The U.S. IPO market witnessed major exits:

• Figma raised $1.2B and surged 250% on debut.

• Bullish, a regulated crypto exchange, raised $1.1B.

• Klarna (Sweden) raised $1.3B in its U.S. IPO.

These exits mark a potential shift after years of frozen public markets, with investors seeing credible liquidity pathways again — a critical factor for venture fund performance and LP confidence.

3. Defensetech and Dual-Use Technologies Gain Momentum

Defense-related startups attracted large funding:

• BETA Technologies ($469M) and Castelion ($350M) in the U.S., and Galactic Energy ($335M) in China.

Venture capital is now targeting dual-use technologies — solutions with both commercial and military applicability — reflecting how geopolitics are influencing investment themes.

4. Quantum Computing Matures into a Competitive VC Sector

Quantum computing emerged as a serious focus for late-stage VC:

• PsiQuantum ($1B) and Quantinuum ($594M) in the U.S.

• IQM ($320M) in Finland and Multiverse Computing ($215M) in Spain suggest Europe is catching up with the U.S. in this frontier tech space.

This indicates that quantum tech is transitioning from research to commercialization — particularly in fault-tolerant computing and compression algorithms.

5. Hardware Startups Are Back in Vogue — Especially in China

While hardware was previously viewed as capital-intensive and less agile, that perception is shifting:

• Chinese VC activity in semiconductors, flying cars (XPeng Aeroht), EVs, and data center infrastructure is rising sharply.

• This is partly due to China’s national strategy of hardware self-sufficiency amid U.S. sanctions and export controls.

Western VCs are also revisiting hardware in AI-adjacent areas like data centers, energy, and edge AI chips, indicating a new CapEx-heavy phase in venture funding.

6. Africa’s VC Surge Pauses — But Fintech and Agtech Remain Promising

After previous quarters of fast growth, VC investment in Africa slowed in Q3, but fintech remained the top sector. Climate and Agtech are seen as emerging priorities, showing potential for impact-aligned and scalable ventures — particularly in regions underserved by global capital markets.

II. Most Surprising, Controversial, and Valuable Insights

Surprising

• AI companies dominated every single top 10 VC deal globally, except for two exceptions in enterprise software and quantum computing. This sheer concentration in one theme is unprecedented.

• Asia (particularly China), while seeing strong individual deals (e.g., Galactic Energy), lagged significantly behind the Americas and Europe in funding volume and mega-rounds — signaling a shift in VC attention due to geopolitical concerns and regulatory clampdowns.

Controversial

• The rebound in defense-related and dual-use VC raises ethical questions around the role of venture capital in militarization. Many of the funded startups can be embedded into military operations, surveillance infrastructure, or geopolitical power projection — a trend at odds with ESG or peace-oriented investment mandates.

• Massive concentration of capital in a handful of AI companies risks market distortion and reinforces monopolistic dynamics. With Anthropic, xAI, and Databricks each pulling $1B+ rounds, smaller AI players could be crowded out despite strong products.

Valuable

• The data on unicorn creation shows a meaningful uptick — but with a realistic caveat: many unicorns now need to prove monetization, not just valuation hype. The post-2021 market correction appears to have instilled more discipline among VCs and founders alike.

• The growth in secondary transactions — especially for mature private companies not seeking IPOs — offers liquidity without public market exposure. This is becoming a structural feature of late-stage venture capital.

IV. Regional Dynamics

• United States: $80.9B in VC — remains the epicenter of AI and IPO activity. Acquihires on the rise as firms seek AI talent.

• Canada: Anchored by Cohere’s $600M round, with strong growth in AI for mining, tax, and agri-tech.

• Europe: Steady with strong growth in late-stage and pre-seed funding. Mistral and Nscale showed scale-up potential.

• Asia: Flat. Deals exist, but geopolitical pressure, U.S. trade restrictions, and less IPO activity are deterring capital.

• Africa: Paused but promising — fintech, agtech, and climate solutions seen as future growth areas.

V. Forward-Looking Trends for Q4 2025

1. Continued dominance of AI — especially in infrastructure and vertical applications.

2. Robotics to emerge as the next hot category.

3. IPO window expected to remain open for mature startups.

4. Fintech consolidation will continue in the U.S., but flourish in Latin America.

5. Government policy — especially U.S. DOJ rulings, China’s AI and data rules, and SR&ED reform in Canada — will play an outsized role in shaping VC flows.

Conclusion

KPMG’s Q3 2025 Venture Pulse paints a picture of a venture capital landscape undergoing thematic concentration, geographic realignment, and strategic maturation. The outsized bets on AI signal both opportunity and risk: opportunity for transformative returns, and risk of saturation and monopolistic entrenchment. The simultaneous rebound in IPOs, growing secondary market structures, and rising attention to dual-use and hardware sectors underscore a maturing VC ecosystem — more selective, more strategic, and more geopolitically attuned.

As we head into Q4 and 2026, the challenge for founders and investors alike will be to ride the AI wave without losing sight of fundamentals, ethical considerations, and the broader innovation economy. The AI boom may be redefining the venture capital playbook — but whether it leads to sustainable, inclusive growth remains an open question.