Global VC investment surged from $118.7 billion in Q4’24 to a ten-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, including a record-setting $40 billion raise by OpenAI, 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.

The Americas attracted $94.5 billion in VC investment in Q1’25—nearly three-quarters of the global total—with the U.S. accounting for $91.5 billion of this amount.

Europe remained relatively flat, with $18 billion in VC investment raised across 1,883 deals, while the Asia-Pacific region continued to experience a significant slump, drawing only $12.9 billion in investment across 2,149 deals.

“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,” Conor Moore, global head of KPMG Private Enterprise, said.

“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 corporate VC investment rose from $69.4 billion in Q4’24 to $80.8bn in Q1’25, with the US accounting for the majority of investment during the quarter, driven by large megadeals. At the other end of the spectrum, CVC investments in the Asia-Pacific region fell to a 10-year low of $5.8bn during Q1’25.

KPMG found that the median deal size for Series D+ deals rose substantially in both the Americas and Europe – from $91.6m to $96.1m in the Americas and $84.5m to $177.5m in Europe.

Exit values remains 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.

AI Remains Red-Hot to VC Investors

AI remained the biggest ticket for VC investors globally in Q1’25, with the $40 billion raise by US-based Open AI breaking the record for the largest VC funding round ever recorded. During the quarter, US-based Anthropic and Infinite Reality also raised large rounds of $4.5bn (two closings) and $3bn respectively.

Europe also saw strong AI funding, with Sweden-based Neko Health raised $260m and UK-based Synthesia raised $180m.

In the Asia-Pacific region, China-based Neolix Technologies and Univista raised $137 million and $137 million respectively, Australia-based Harrison.ai raised $111 million, Hong Kong-based InSilico Medicine raised $100 million, and India-based Spotdraft raised $54 million.

During the quarter, China also saw three new AI models launched, including DeepSeek’s R1 AI model and new models by Tencent and Alibaba. 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.

European VC Investment Remains Steady

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 over $500 million (up from just one in Q4)—highlighted the shifting focus among VC investors towards larger, later-stage opportunities.

These large megadeals included Binance ($2 billion), Reneo ($624 million), Isomorphic Labs ($600 million), Rapyd Financial ($500 million), and Ori ($500 million). 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.

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What Will Q2’25 VC Investment Look Like?

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.