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Greetings, Term Sheeters. This is finance reporter Luisa Beltran, subbing for Allie.
It’s time to take the temperature of the venture and private equity sectors, and we’ve got some new numbers.
VC investing in startups is on the upswing, with venture firms pouring $91 billion into companies during the second quarter, a roughly 11% increase year-over-year, according to business data and predictive intelligence firm Crunchbase. Second quarter’s $91 billion represents a 20% drop from the first quarter when startups raised $114 billion. However, Q1 was the strongest quarter for venture investment since Q2 2022. (First quarter also included OpenAI’s $40 billion financing, the largest private round ever.)
Nearly half of Q2’s $91 billion came from one sector: AI, which kicked in $40 billion. (Meta’s $14.3 billion investment in Scale AI in June generated more than one-third of AI sector funding.) Healthcare and biotech came in second with $14.8 billion in funding, while financial services delivered $11.3 billion for third place.
“Global funding has increased year over year for the past three quarters, driven primarily by billion-dollar-plus rounds into AI research labs as well as data and infrastructure providers in the sector,” Crunchbase said in the report.
Nearly one-third of all capital in Q2 went to 16 companies—including Anduril Industries’ $2.5 billion round, and the separate $2 billion fund rounds for Thinking Machine Labs and Safe Superintelligence.
Startup M&A was also active. Q2 saw $50 billion in reported exit value, the second strongest quarter since 2021. The total was down from $71 billion in the first quarter, which included Google’s $32 billion buy of Wiz. OpenAI was the most active and largest acquirer of startups in Q2, scooping up four companies, including Jony Ive’s io for $6 billion and Windsurf for $3 billion.
PE on the sidelines
On the private equity side of things, fundraising among PE firms continues to drag. Global PE funds have collected $223 billion so far in 2025, on pace to fall short of last year’s performance, when PE pools accumulated $551 billion for all of 2024, according to research and data firm PitchBook. US funds have raised $149 billion so far in 2025, also below last year’s pace, when PE pools collected $333.4 billion.
The slowdown in PE fundraising is due to fewer mergers and a decline in IPOs. PE firms have struggled to sell their investments, which means they can’t send money back to their investors and this causes their own fundraising to stall. PE firms entered 2025 expecting a strong year, or at least a rebound, in mergers. But volatility due to President Trump’s Liberation Day tariffs caused many deals and IPOs to be put on hold in April. While new issues began rebounding in June, M&A remains sluggish.
U.S. private equity managers have more than $1 trillion in dry powder, or uninvested, committed capital, according to Kyle Walters, private equity research analyst at PitchBook. Many PE firms are “[sitting] on the sidelines, choosing not to sell most of their assets in what they deem to be an unfavorable exit market,” Walters said. (The PE dry powder total figure is as of Sept. 30, 2024, and has likely dropped since then, Walters said. Venture firms had $701.2 billion in uninvested capital, he said.)
So far in 2025, PE funds have clinched $339.8 billion in total exit value, which is on pace to surpass last year’s total of $384.2 billion. A handful of large deals, including natural gas exporter Venture Global’s $58.7 billion IPO and WorldPay’s $24.3 billion sale to Global Payments, have helped boost exit value this year.
“We need to see a strong pick-up in terms of exit count if we want to see the fundraising slowdown come to an end. And given that most exit activity is in a wait-and-see mode, you likely won’t see fundraising activity pick back up until 2026,” Walters said.
See you Wednesday,
Luisa Beltran
X: @LuisaRBeltran
Email: luisa.beltran@fortune.com
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This story was originally featured on Fortune.com
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