Venture capital funding maintained its strong trajectory in Q3 2025, crossing the $80 billion mark with impressive momentum despite a continued decline in deal volume. While the number of deals dropped to an estimated 4,208 transactions, the size and ambition of funded companies continued to climb, creating an unmistakable bifurcation in the market.
Drawing insights from Pitchbook-NVCA Venture Monitor, here's a breakdown of the key trends we're watching:
Funding stays robust, but deal volume continues to decline
VCs deployed $80.9 billion globally across 4,208 deals this quarter. That's a 4.9% quarter-over-quarter increase in deal value, but continued weakness in deal count. For the year to date, deal value has reached $250.2 billion across 12,422 deals, already surpassing the full-year totals for 2022-2024.
The median deal size has reached new heights across all series, with D+ rounds commanding a median of $100.0 million, reflecting investors' increasing focus on proven, scalable ventures.
AI dominance reaches unprecedented levels
Artificial intelligence funding reached extraordinary levels in Q3, with AI and machine learning companies capturing 64.3% of all venture deal value year-to-date while representing only 37.5% of deal count. This concentration is even more striking than the previous quarter's figures.
Notable AI-related mega-rounds included:
- Anthropic – $13 billion Series F at a $183 billion valuation, nearly triple its previous Series E.
- Databricks – $1 billion at a $100 billion post-money valuation, a 61.3% increase from December 2024.
- xAI – $10 billion in debt and equity at a $75 billion valuation.
The average AI deal size has reached $58.9 million, compared to a median of $32.1 million, highlighting the premium investors are willing to pay for promising AI technologies.
Megadeals reshape the funding landscape
Nine billion-dollar-plus financings accounted for nearly 40% of Q3's deal value, emphasizing the stark divide between elite startups and the rest. VCs averaged over 100 megadeals per quarter throughout 2025, a level not seen since 2021-2022, with these large rounds accounting for 70% of yearly deal value.
Unlike previous boom periods, only 37% of megadeals included crossover investors, down from 60% in 2021, indicating that traditional VC firms have grown their fund sizes and capabilities to handle these outsized rounds independently.
Unicorn market value balloons past $3.7 trillion
The unicorn market reached unprecedented heights, with aggregate post-money valuations surpassing $3.7 trillion. Despite the challenging environment for smaller deals, unicorns captured 56.8% of all venture dollars while representing just 2.7% of the deal count.
Private companies valued at $5 billion or more reached a record $109.6 billion in deal value across 69 deals in 2025, nearly doubling the previous year's total.
Exit market shows signs of life but remains selective
Exit activity accelerated significantly, generating $74.5 billion across 362 exits in Q3 2025, marking the strongest quarter since the pandemic era. Seven unicorns completed IPOs during the quarter, with notable successes including:
- Figma – Achieved a 250% price pop on its July IPO, remaining nearly double its IPO price
- Firefly Aerospace – Went public at a $5.6 billion valuation, more than double its Series D
- Gemini – Debuted at $7.1 billion following stablecoin regulatory clarity
- Netskope – Listed at $7.3 billion, highlighting cybersecurity-AI convergence
However, unlike the pandemic era, companies today must demonstrate profitability or a credible path to it. Tech companies represented 95.1% of IPO value creation, while biotech struggled with only eight companies going public through Q3.
Corporate venture capital maintains a strong presence
Corporate VC participation remained robust, involved in $144.0 billion worth of deals, representing 62.4% of total deal value. However, CVC participation by deal count dropped to 20.9%, indicating corporate investors are focusing on larger, later-stage opportunities.
Fundraising faces continued headwinds
VC fundraising remained subdued with only $45.7 billion raised across 376 funds through Q3, putting the market on pace for the lowest annual total since 2017. The median time to close stretched to 15.6 months, up from 9.7 months in 2022.
The top 10 VC funds captured 42.9% of all capital raised, the highest concentration in at least a decade, while emerging managers face particular pressure with only 177 funds closed, marking a decade low.
What we're watching
AI infrastructure consolidation: The continued arms race in AI is driving unprecedented valuations but also raising questions about sustainable returns.
Policy alignment advantage: Companies whose missions align with current administration priorities in AI, space, crypto, and national security are finding smoother paths to public markets.
Liquidity solutions: Creative approaches, including continuation vehicles, secondaries, and employee liquidity programs, are gaining traction as traditional exits remain constrained.
Market bifurcation deepening: The divide between well-funded AI unicorns and struggling smaller companies continues to widen, with sub-$5 million rounds falling to just 50.3% of all deals, a decade low.
Geographic concentration: The Bay Area captured 57% of all capital invested in Q3, reinforcing winner-take-all dynamics in key innovation hubs.
Final thoughts
Q3 2025 represents venture capital at its most concentrated and selective. While overall funding levels remain strong, the market has evolved into a stark two-tiered system where AI-focused megadeals dominate headlines and capital allocation, while traditional venture-backed companies face an increasingly challenging funding environment.
The successful public debuts of companies like Figma and the continued appetite for AI investments suggest underlying strength, but the sustainability of current valuations and the health of the broader ecosystem beyond the AI giants remain key questions as we head into 2026.
At GFR, we remain excited about the builders navigating this evolving landscape and stay committed to supporting the next generation of transformative companies, regardless of market conditions.
If you're an investor or LP looking for partnership opportunities, reach out to us at hello@gfrfund.com. For startups, please pitch to us by filling out this form. We'd love to hear from you!
