US startup funding increased by 75.6% in the first half of 2025, reaching US$162.8 billion, according to a report by PitchBook.

This performance is the strongest since the same period in 2021, mainly due to investments in AI.

Despite this surge, venture capital firms faced challenges, raising only US$26.6 billion across 238 funds during the same period—a decrease of 33.7% compared to the previous year.

Additionally, the median time for fund managers to close new funds extended to 15.3 months, the longest duration in over a decade.

AI investments represented 64.1% of the total deal value in early 2025.

Notable transactions included OpenAI’s US$40 billion funding round and Meta’s US$14.3 billion stake purchase in Scale AI.

Other major deals involved investments in Safe Superintelligence, Thinking Machine Labs, Anduril, and Grammarly, each exceeding US$1 billion.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ The bifurcated venture landscape: record startup funding despite VC fundraising struggles

The current funding environment represents a historic anomaly with startup capital and VC fundraising moving in opposite directions.

While startups raised US$162.8 billion in H1 2025, traditional venture firms raised just $26.6 billion, creating a funding gap of $136.2 billion that’s being filled by non-traditional sources.

This divergence reflects a structural shift in venture capital, with big tech companies like Meta becoming major startup investors, as evidenced by their US$14.3 billion investment in Scale AI.

The median time to close a VC fund has stretched to 15.3 months in Q2 2025, the longest in a decade, while distributions to limited partners have only recently begun to exceed capital calls for the first time since 2015 1.

This pattern differs markedly from the 2021 boom when both startup funding and VC fundraising expanded simultaneously, suggesting today’s market is more selective despite appearing equally exuberant on the surface.

Limited partners remain cautious due to liquidity constraints and underwhelming returns, with global venture returns still negative on a one-year basis despite recent improvements 2.