Venture Capital

Key Trends in Venture Capital (2015–2025)

• Surge and Correction in Global VC Funding
  • Rapid Growth Period: From 2015 to 2021, global VC investment grew at a 13.5% compound annual growth rate, peaking at unprecedented levels in 2021 (Q2: $157.1bn globally). ^[2ry2zc]
  • Correction Phase: Since late 2022, funding volumes dropped sharply, with a 17% quarter-over-quarter decline noted in Q2 2025. This reflects a normalization after exceptional pandemic-era highs and outlier deals like OpenAI. ^[6mw8zl]

• Mega-Rounds and Market Volatility
  • Rise of Mega-Rounds: Companies raising $100M+ saw an explosion from 111 rounds in 2015 to 859 in 2021, largely driven by interest in pre-IPO tech and life sciences. ^[16zmha]
  • Sudden Drop and Partial Recovery: Count of $100M+ rounds fell dramatically in 2023 but rebounded in 2024, reflecting cyclical investor appetites and macroeconomic conditions. ^[16zmha]
• Geographic Shifts and Sector Focus
  • US Dominance: The US consistently accounts for the largest share—capturing 52.8% (2020) and 64% (Q2 2025) of global VC activity—with resilience during periods of volatility. ^{[6mw8zl] [2ry2zc]}
  • Europe’s Ascent and Cooling: Europe enjoyed consecutive quarters of investment growth to record highs by 2021, then cooled by 2025 due to ongoing macroeconomic uncertainties. ^{[6mw8zl] [2ry2zc]}
  • Asia’s Unique Trajectory: Asia’s VC activity peaked pre-pandemic and remains below Q3 2019 levels, with China subdued but India emerging as a strong spot in fintech and mobility. ^[6mw8zl]
• Deepening Focus on Technology
  • Generative AI and Software: Since 2024, 45% of VC funding concentrated in software and AI—with generative AI showing record growth, particularly in development tools and applied AI. ^[6mw8zl]
  • Shift to Capital-Intensive Fields: Investments now increasingly target hard tech, generative AI, and sectors like logistics, satellite tech, and space tourism. ^{[zy1rx1] [6mw8zl]}
• Evolution in Investment Strategies
  • Boutique and Targeted Funds: Growing trend toward boutique or “artisanal” venture firms that focus on early-stage startups, investing smaller amounts with hands-on support and industry expertise, often prioritizing founder relationships and domain expertise over purely financial metrics. ^[zy1rx1]
  • Valuation Corrections: Investors increasingly prefer stronger, more profitable startups, with valuation discipline rising and market “cleanup” underway after the loose practices of the boom period. ^[zm9oc4]
  • Increasing Seed-Stage Deal Sizes: Notable recent seed deals (e.g., $2B round for Thinking Machines show upward pressure on early-stage valuations, even as late-stage averages dip due to correction. ^[6mw8zl]
• Role of Corporate Venture Capital and Corporates
  • Steady Corporate VC Activity: Corporate VCs have consistently accounted for about 36% of deal value in recent years, reflecting sustained interest in breakthrough technologies and willingness to fund capital-intensive ventures. ^[6mw8zl]
• Liquidity and Exit Challenges
  • IPO and M&A Market Volatility: Fewer IPOs and exit opportunities since 2022 have slowed distributions to limited partners, causing liquidity constraints and shaping more cautious investment approaches. ^{[zy1rx1] [zm9oc4]}

Additional Insights

• Pandemic Effects: COVID-19 catalyzed a burst of innovation and digitization, further accelerating VC interest in transformative technologies across sectors. ^[2ry2zc]
• Interest Rate Impact: Recent stability in interest rates and tightening monetary policy have influenced investor risk appetites and contributed to market corrections. ^[zm9oc4]

Citations