July 18, 2025: The United States startup ecosystem roared back to life in the first half of 2025 with significant VC Deals , notching a 75.6% rise in funding to $162.8 billion, according to data released Tuesday by PitchBook. This surge marks the strongest first-half performance since 2021 and positions the US for its second-best year ever in venture capital activity.
While funding momentum remains muted globally, the US is experiencing an AI-led revival, with capital flowing into emerging tech sectors despite fundraising challenges among VC firms.
What’s Driving the AI Boom?
The continued dominance of artificial intelligence was the key driver behind the funding spike. The PitchBook report shows that:
- 64.1% of total deal value came from AI-related startups.
- AI deals made up 35.6% of all deals in H1 2025.
- Over $69.9 billion was invested in startups in just the past three months.
Some of the biggest transactions include:
- $40 billion funding round by OpenAI
- $14.3 billion stake acquisition in Scale AI by Meta
- Other $1B+ deals in Safe Superintelligence, Thinking Machine Labs, Grammarly, and Anduril
The report links this boom to sustained interest in foundational AI models and infrastructure, catalyzed by the success of platforms like ChatGPT, and continued scaling by major players in large language models, robotics, and defense AI.
VC Deals Falls Even as Startups Surge
Interestingly, while startups drew record investment, VC fundraising itself declined, reflecting a disconnect in the ecosystem. According to the report:
VC firms raised only $26.6 billion across 238 funds, down 33.7% YoY.
Median fundraising timelines extended to 15.3 months, the longest in over a decade.
Limited partners (LPs) remain cautious due to past underperformance and liquidity challenges.
This divergence highlights how VC Deals is concentrating into proven technologies and later-stage deals, rather than flowing freely across the board.
IPO & Exit Momentum Returns
Another key insight from the report is the rebound in exit activity, which rose 40% in Q2 2025 over the same quarter last year. This signals renewed optimism in the market, especially in sectors aligned with current US government priorities such as:
- AI & national security
- Defense tech
- Fintech and crypto
The loosening of antitrust scrutiny and signs of recovery in the IPO pipeline are seen as potential green lights for more companies to go public in the second half of the year.
What Indian Startups & VCs Should Watch
As India’s startup ecosystem navigates a more cautious funding environment in 2025, the US trends offer critical insights:
AI is no longer optional: Indian startups in deeptech, generative AI, and applied machine learning may attract global VC interest if they demonstrate scale and defensibility.
Capital concentration is real: Only clear category leaders will raise large rounds.
Fundraising cycles are longer: Indian VC firms may face similar fundraising delays and must plan accordingly.
IPO optimism could spread: A thaw in global public markets could create exit opportunities for Indian unicorns eyeing the US or domestic bourses.
