Q2 venture funding climbs on AI deals while PE stuck on sidelines

It’s time to take the temperature of the venture and private equity sectors, and we’ve got some new numbers. 

VC investing in startups is on the upswing, with venture firms pouring $91 billion into companies during the second quarter, a roughly 11% increase year-over-year, according to business data and predictive intelligence firm Crunchbase. Second quarter’s $91 billion represents a 20% drop from the first quarter when startups raised $114 billion. However, Q1 was the strongest quarter for venture investment since Q2 2022. (First quarter also included OpenAI’s $40 billion financing, the largest private round ever.) 

Nearly half of Q2’s $91 billion came from one sector: AI, which kicked in $40 billion. (Meta’s $14.3 billion investment in Scale AI in June generated more than one-third of AI sector funding.) Healthcare and biotech came in second with $14.8 billion in funding, while financial services delivered $11.3 billion for third place.

“Global funding has increased year over year for the past three quarters, driven primarily by billion-dollar-plus rounds into AI research labs as well as data and infrastructure providers in the sector,” Crunchbase said in the report.

Nearly one-third of all capital in Q2 went to 16 companies—including Anduril Industries’ $2.5 billion round, and the separate $2 billion fund rounds for Thinking Machine Labs and Safe Superintelligence.

Startup M&A was also active. Q2 saw $50 billion in reported exit value, the second strongest quarter since 2021. The total was down from $71 billion in the first quarter, which included Google’s $32 billion buy of Wiz. OpenAI was the most active and largest acquirer of startups in Q2, scooping up four companies, including Jony Ive’s io for $6 billion and Windsurf for $3 billion.

PE on the sidelines

On the private equity side of things, fundraising among PE firms continues to drag. Global PE funds have collected $223 billion so far in 2025, on pace to fall short of last year’s performance, when PE pools accumulated $551 billion for all of 2024, according to research and data firm PitchBook. US funds have raised $149 billion so far in 2025, also below last year’s pace, when PE pools collected $333.4 billion.

The slowdown in PE fundraising is due to fewer mergers and a decline in IPOs. PE firms have struggled to sell their investments, which means they can’t send money back to their investors and this causes their own fundraising to stall. PE firms entered 2025 expecting a strong year, or at least a rebound, in mergers. But volatility due to President Trump’s Liberation Day tariffs caused many deals and IPOs to be put on hold in April. While new issues began rebounding in June, M&A remains sluggish.

U.S. private equity managers have more than $1 trillion in dry powder, or uninvested, committed capital, according to Kyle Walters, private equity research analyst at PitchBook. Many PE firms are “[sitting] on the sidelines, choosing not to sell most of their assets in what they deem to be an unfavorable exit market,” Walters said. (The PE dry powder total figure is as of Sept. 30, 2024, and has likely dropped since then, Walters said. Venture firms had $701.2 billion in uninvested capital, he said.)

So far in 2025, PE funds have clinched $339.8 billion in total exit value, which is on pace to surpass last year’s total of $384.2 billion. A handful of large deals, including natural gas exporter Venture Global’s $58.7 billion IPO and WorldPay’s $24.3 billion sale to Global Payments, have helped boost exit value this year.

“We need to see a strong pick-up in terms of exit count if we want to see the fundraising slowdown come to an end. And given that most exit activity is in a wait-and-see mode, you likely won’t see fundraising activity pick back up until 2026,” Walters said.

See you Wednesday,

Luisa Beltran
X: @LuisaRBeltran
Email: luisa.beltran@fortune.com
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Venture Deals

– Talon.One, a Berlin-based enterprise loyalty and promotion software company, raised $135 million in funding. Silversmith Capital Partners and Meritech Partners led the round and were joined by existing investor CRV. 

– CarOnSale, a Berlin-based B2B marketplace for used car trading, raised €70 million ($82 million) in Series C funding. Northzone led the round and was joined by existing investors HV Capital, Insight Partners, Stripes, and Creandum. 

– QEDMA, a Tel Aviv-based quantum computing company, raised $26 million in Series A funding. Glilot Capital Partners led the round and was joined by IBM, Korea Investment Partners, existing investor TPY Capital, and others. 

– Bumo, a Pasadena, Calif.-based child care marketplace, raised $10 million in seed funding. Offline Ventures and True Ventures led the fund and were joined by Goodwater Capital, Marketplace Capital, and others. 

– Fantasy Life, a New York City-based online sports and gaming company, raised $7 million in seed funding. LRMR Ventures and SC Holdings led the round and were joined by Eberg Capital, Bolt Ventures, Wasserman Ventures, and others. 

– BridgePort, a New York City-based middleware software provider for crypto trading, raised $3.2 million in seed funding. Further Ventures led the round and was joined by Virtu, XBTO, Blockchain Founders Fund, Fun Fair Ventures, and Humla Ventures. 

Private Equity

– Thoma Bravo agreed to acquire Olo, a New York City-based SaaS restaurant platform, in an all-cash deal valuing the company at approximately $2 billion. 

–Tikehau Capital raised €1 billion ($1.17 billion) for its portfolio company Egis, a Paris-based architectural and civil engineering firm. 

–Development Partners International, agreed to acquire a $190 million minority stake in Alameda Healthcare, an Cairo-based private healthcare group. 

– TEAM Technologies, backed by Arlington Capital Partners, acquired Duke Empirical, a Morgan Hill, Calif.-based developer and manufacturer of cardiovascular medical devices. Financial terms were not disclosed. 

–ORIX USA, a subsidiary of Japan-based ORIX Corporation, agreed to acquire a majority stake in Hilco Global, a Northbrook, Ill.-based diversified financial services company. Financial terms were not disclosed. 

Exits

– The Chamberlain Group, backed by Blackstone, agreed to acquire Arrow Tru-Line, an Archbold, Ohio-based manufacturer and supplier of garage door hardware, from MiddleGround Capital. Financial terms were not disclosed. 

OTHER

– TPG Capital acquired a 70% stake in DIRECTV, an El Segundo, Calif-based satellite television company, from AT&T for $7.6 billion in cash.

– Lightcast acquired Rhetorik, a Wokingham, UK-based B2B organizational intelligence and data provider. Financial terms were not disclosed. 

FUNDS + FUNDS OF FUNDS

–Red Dot Capital Partners, a Tel Aviv-based venture capital firm, raised $320 million for its third fund focused on early-stage growth companies across various sectors. 

PEOPLE

–Olympus Partners, a Stamford, Conn.-based private equity firm, promoted Matt Bujor to principal, Connor Wood to principal, Courtney Dunne to vice president, and Marty Durkin to vice president. 

–Partech, a Paris-based venture capital firm, promoted Alison Imbert to partner, Moritz Steinbrecher to principal, and Ariadne Lemieux-Cumberlege to senior associate on the Seed team. The firm promoted Simone Riva to partner and Julia Najman to senior associate on the Venture team. 

–Stonepeak, a New York City-based private equity firm, added Cindy Marrs as a senior advisor. Previously, she was at Wellington Management.