Global VC investment rises in Q1’25, according to KPMG’s Venture Pulse

• $126.3 billion in VC funding globally despite significant drop in deal volume
• US attracts a thirteen-quarter high of $91.5 billion in VC investment in Q1`25
• Asia-Pacific region sees VC investment fall to record low of $12.9 billion

 

Global VC investment surged from $118.7 billion in Q4`24 to an eleven-quarter high of $126.3 billion in Q1`25, despite ongoing geopolitical conflicts and tensions, continued concerns about global trade and tariffs, and the delay of a major reopening in the IPO market. The overall increase in deal value was largely driven by a series of mega-rounds by AI companies according to KPMG Private Enterprise’s Venture Pulse”a quarterly report tracking investment trends globally across major regions around the world.

While VC funding rose considerably given the red-hot investment in AI, global deal volume continued to plummet, falling from 8,801 deals in Q4`24 to a record low of 7,551 deals in Q1`25. While many VC investors were optimistic heading into Q1`25, fresh uncertainties saw many pressing pause again on major deals outside of the AI space.

We headed into Q1`25 with some cautious optimism around a renewed sense of business confidence, more investment and more exit activity. That optimism has now abated in the face of the uncertainty caused by various US executive orders and the back and forth on tariffs and trade. said Conor Moore, Global Head of KPMG Private Enterprise, KPMG International. With expectations for the recovery of the IPO market moving farther out again, we could see a shift in VC firms needing to reallocate investment priorities as some companies may need additional funding prior to a now more distant IPO.

• Global VC investment rose from $118.7 billion across 8,801 deals in Q4`24 to $126.3 billion across 7,551 deals in Q1`25.
• In the Americas, VC investment rose from $80.9 billion to $94.5 billion quarter-over-quarter”including from $77.2 billion to $91.5 billion in the US”while Europe saw VC investment remain relatively steady at $18 billion; the Asia-Pacific region saw both VC deal value and volume fall to record lows”dropping from $18.9 billion invested across 2,522 deals in Q4`24 to only $12.9 billion invested across 2,149 deals in Q1`25. 
• Global corporate VC-participating investment rose from $69.4 billion in Q4`24 to $80.8 billion in Q1`25; the US accounted for the majority of investment during the quarter ($65.5 billion), driven by large megadeals. At the other end of the spectrum, CVC investment in the Asia-Pacific region fell to a 10 year low of $5.8 billion during Q1`25.
• The median deal size for Series D+ deals rose substantially in both the Americas and Europe”from $91.6 million to $96.2 million in the US and from $84.5 million to $177.5 million in Europe.
• Exit value remained relatively muted, with just $78.2 billion seen globally. On a regional basis, exit activity increased somewhat in the United States but fell to only $6.6 billion in Asia-Pacific”the lowest level of exit activity seen in the region since 2015.

• India saw VC investment drop slightly from $2.6 billion to $2.4 billion (Page no.87) as investors held back from making major investments given the rapidly evolving geopolitical situation.
• Capital markets also took a beating in India during the quarter amid concerns of overpricing.
• While markets recovered somewhat in the second half of Q1`25, the general trajectory was lower than initially expected in Q4`24.
• VC investors in India remained highly focused on consumer offerings in Q1`25, with areas such as e-commerce and quick commerce attracting the most significant attention.
• Payments and lending also continued to be a key sector of investment in India.

• VC investment in India could remain somewhat soft in Q2`25, although the long-term outlook remains positive given the country`s strong macros.

Commenting on the trends from India, Nitish Poddar, Partner and National Leader – Private Equity, KPMG in India says, The most important thing in India right now is that the macros are intact. Nothing fundamentally has changed. The money has started coming back to India. There are certain large IPOs of startups that have been announced, which should hit the market over the next one or two quarters. I think we are back in business ” and what we`re seeing now is really just a minor impediment ” a speedbump.

AI remained the biggest ticket for VC investors globally in Q1`25. Europe and the Asia-Pacific region also saw strong AI funding.  During the quarter, China also saw three new AI models launched. The three models”all said to be more energy efficient than others on the market”further highlights the competitiveness of the AI space at the moment.

VC investment in the Americas reached a three-quarter high of $94.5 billion across 3,331 deals in Q1`25, driven primarily by activity in the US, which accounted for $91.5 billion across 3,003 deals. The quarter was marked by a wave of megadeals in the large language model (LLM) space. Despite the jump in total investment, deal volume declined for the fourth consecutive quarter, underscoring continued investor caution in the region. While VC investors had been optimistic following the US presidential election, renewed concerns over tariffs and related market volatility introduced fresh uncertainty that tempered momentum.

Outside the US, Canada saw muted VC activity amid its intensifying tariff dispute with the US; Total VC investment in Canada fell to just $917 million across 148 deals ” levels not seen since early 2018. In Latin America, Mexico saw VC investment drop from $626 million to $281 million quarter-over-quarter, although deal volume remained relatively resilient. Conversely, Brazil saw an uptick in VC funding”from $464 million in Q4`24 to $562 million in Q1`25, supported by strong CVC activity.

VC investment in Europe held steady in Q1`25 at $18 billion, although deal volume declined from 2,314 to 1,883 quarter-over-quarter. A growth in megadeals”including five transactions at or over $500 million (up from just one in Q4)”highlighted the shifting focus among VC investors towards larger, later-stage opportunities. The UK led the region with $5.5 billion in VC investment, followed by Germany ($2.2 billion) and France ($1.7 billion).  

Deal volume in Europe fell to a six-year low amid renewed geopolitical and economic uncertainty, partly driven by new tariff policies announced by the US administration. Investors in Europe continued to show a clear preference for established startups with proven traction, given the ongoing market volatility and continued lack of IPO activity. AI remained a key area of focus for VC investors, particularly in areas related to industry-specific applications. Interest in the AI sector was further supported by new funding initiatives announced by the EU and various member states aimed at strengthening the regional AI ecosystem.

VC investment and deal volume in the Asia Pacific region dropped to $12.9 billion in investment across 2,149 deals in Q1`25 ” the lowest levels the region has seen in over ten years. VC funding dropped consistently across the region, with China seeing a drop from $10.9 billion to $6 billion quarter-over-quarter and Japan seeing a drop from $1.1 billion to $900 million. Singapore was the sole bright spot in the region in Q1`25, with VC investment rising from $880 million to $1.7 billion.

VC investment is expected to be quite subdued in Q2`25 as investors remain cautious amid continued concerns over a potential trade war and ongoing geopolitical uncertainty. Many VC investors are taking a wait-and-see approach, holding off on major investments until there is greater clarity in the global economic environment.

The AI space will likely remain a key exception; despite the global geopolitical uncertainty, AI is expected to continue to attract sizeable deals during the quarter. Industry-specific AI solutions are expected to attract increasing levels of investment, alongside advanced robotics and supporting technologies ” such as LIDAR ” which enhance the effectiveness of autonomous systems. In light of geopolitical tensions, defence tech and cybersecurity are also likely to see increasing attention from VC investors.

Global M&A activity could accelerate over the next few quarters, especially in the AI sector. Large technology firms are expected to pursue strategic acquisitions to secure emerging AI capabilities before valuations soar. Additionally, companies seeking alternatives to a volatile IPO market may increasingly view M&A as a more stable exit route.