The year 2025 marked the third most robust performance ever for the global venture capital sector , despite a challenging macroeconomic climate, liquidity constraints, and subdued fundraising activity in numerous regions. According to the Global VC First Look (Q4 2025) analysis produced by PitchBook researchers, the total volume of venture transactions worldwide totaled $512.6 billion , surpassed only by the record-breaking years of 2021–2022.
However, beyond the striking headline figures lies a fundamental characteristic of the 2025 market – an unparalleled concentration of capital : across industries, geographic areas, and stages of company maturity.
AI as the prime recipient of the venture cycle
More than 50% of all venture capital in 2025 was directed toward AI domains — spanning from foundational models and AI infrastructure to specialized AI solutions. This proportion is unprecedented and signals not just a short-term trend, but a deep-seated shift within the venture landscape .
Indeed, AI has evolved into the “new standard” for venture capital allocations:
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substantial investments are focused on a select group of frontrunners ,
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secondary and intermediate firms are facing increasing hurdles in accessing funding,
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Mergers and acquisitions (M&A) are playing an increasing role as a substitute for conventional venture funding.
This implies that the venture capital arena is progressively transitioning away from being a broad-based innovation funding mechanism and more toward being a market focused on wagering on designated leaders .
US supremacy: two-thirds of global VC
The second noteworthy observation from the report is the sheer dominance of the United States . In 2025, the US market represented roughly 66% of total global venture capital .
The underlying causes of this leadership are structural:
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substantial capital reserves and LP networks,
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established private expansion segment,
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density of AI experts, computing resources, and large-scale technology enterprises,
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comparatively enhanced liquidity compared to other geographies.
Consequently, in 2025, the United States differentiated itself from the rest of the world not only in terms of scale but also in the health of its venture capital environment , developing its own, more autonomous funding framework.
Europe and international markets: a complicated path
In contrast to the US, Europe and the majority of international markets are heading into 2026 from a considerably weaker footing . Primary challenges:
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diminished liquidity (few IPOs and significant exits),
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lackluster fundraising by funds in 2023–2024 ,
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a limited quantity of globally scalable AI leaders.
PitchBook explicitly mentions that 2026 is poised to be more demanding for numerous regions as the venture ecosystem has yet to restore equilibrium between investment, exits, and the recirculation of capital.
Venture in 2025: greater capital, fewer transactions
Despite the record totals, 2025 was marked by:
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a reduced number of deals ,
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increased average investment sizes ,
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focus of investments on growth and late-stage ventures,
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prevalence of substantial funding rounds in AI.
This reinforces the idea of a two-speed recovery in the venture capital market: the top tier is expanding rapidly, while the broader base of startups struggles with capital scarcity.
Liquidity represents the foremost challenge of 2026
PitchBook’s analysts highlight: deal activity in the US appears strong, however, without a resurgence in liquidity, this pattern is not sustainable .
In 2026, the market requires:
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more high-caliber IPOs ,
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advancement in strategic M&A , particularly in AI and enterprise software,
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expanded utilization of secondary transactions .
Absent these factors, even historic investment amounts could initiate stress within the venture capital structure.
What the 2025 outcomes signify for investors and startups
For venture capital organizations :
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size and specialization become vital;
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generalist approaches diminish in effectiveness;
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multi-stage funds possess an intrinsic advantage.
For startups :
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AI is not just an option, but a fundamental requirement for competitiveness;
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mid-sized players should anticipate M&A as a credible possibility;
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securing capital is now conditional on market positioning, beyond just product attributes.
Conclusion
The year 2025 will be remembered as a year of substantial figures and heightened concentration. $513 billion in venture capital funding reflected not a return to previous patterns, but the establishment of an evolving venture climate , where:
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AI is predominant,
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The US guides the trajectory,
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liquidity becomes a restriction,
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and the spectrum of genuine beneficiaries is narrowing.
2026 will assess the resilience of this paradigm — both for venture entities and for global startup communities.