Global Startup Funding Trends for Q2 2025: A Look at AI, M&A, and Market Dynamics
The financing landscape for startups showed a modest acceleration in the last quarter of Q2 2025. Investor appetite has reignited, fueled by enthusiasm around artificial intelligence (AI), a resurgence in mergers and acquisitions (M&A), and optimism regarding upcoming stock market introductions.
According to Crunchbase data, global startup funding reached $91 billion in Q2 2025, representing an 11% increase year-over-year but a 20% decrease from the previous quarter. While this figure remains significantly lower than the peaks seen in 2021, the first half of 2025 marked the strongest semester for business investments since early 2022, suggesting a recovery in private markets.
However, the earnings among different regions have been uneven. North America has led the charge, primarily due to blockbuster AI deals. Meanwhile, Germany surpassed the UK to become the leading venture capital market in Europe for the first time in over a decade, and Mexico overtook Brazil as the primary destination for venture capital in Latin America for the first time since 2012.
Surge in Mergers and Acquisitions
The M&A landscape also showed significant momentum, with Crunchbase tracking 918 announced global startup acquisitions in the first half of 2025—an increase of 13% from the same period last year. The total dollar volume for these acquisitions exceeded $100 billion, reflecting a remarkable 155% year-over-year increase, as companies sought to invest heavily in strategic sectors such as AI infrastructure and cybersecurity.
North America’s Unrivaled Leadership in Startup Financing
North America continues to dominate the startup financing landscape, accounting for an astonishing 70% of global funding in the first half of 2025. Total investments reached $145 billion, marking a 43% increase from the previous year and the highest quarterly figure in three years. The region’s AI startups played a pivotal role, attracting nearly $90 billion in investments.
Major investment deals included Meta’s $14.3 billion funding for AI scale and $2.5 billion for the defense tech company Anduril Industries. This resurgence in funding has raised optimism for potential IPOs from fintech companies like Circle and Chime.
Challenges in Asia and Growth in Europe
While Asian startup funding faced challenges, driven largely by China’s notable drop to $5.1 billion in reported funding, a slight recovery was observed in Q2. Overall, Asian startup financing totaled $26.2 billion in the first half of 2025, marking a significant decline year-over-year. However, India reported steady performance, and Israel reached a two-year high.
In Europe, financing showed signs of stability with a 13% share of global startup funding despite a 24% drop compared to the previous year. Investment in the European tech landscape is dominated by sectors such as defense, AI, and fintech, with Germany emerging as a strong contender, surpassing the UK as the region’s leading venture capital market.
Latin America: A Shift in the VC Landscape
Latin America saw a 13% increase in startup financing, led by Mexico, which outpaced Brazil for venture capital investments for the first time since 2012. Notable investments included $170 million for digital bank Klar and $127 million for online used car marketplace Kavak.
Sector-Specific Trends: Cybersecurity, AI, and Fintech
Across various sectors, investor enthusiasm returned, particularly for cybersecurity, which attracted $4.9 billion in funding during Q2 2025. Major players like Cyera and Cato Networks received substantial backing, highlighting the sector’s growing importance.
Overall, AI remains a central theme, driving investments across sectors and regions. As startup M&A activity gains traction and increases investor confidence, it is essential to remain cautious as much of the funding is concentrated in a small number of AI-focused companies.