VPP providers — systems that combine rooftop solar, batteries, and EV chargers to support the grid — are readjusting geographic focus. Mosaic risers cluster in Europe, where stable decarbonization policies and retailer‑led programs shorten time from enrollment to revenue. In the US, hiring and headcount trends favor eastern markets like PJM and NYISO as providers staff market operations, interconnection, and sales roles for capacity programs.

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To create the Tech IPO Pipeline, we scored companies across CBI datasets including Mosaic scores, hiring insights, revenues, exit probabilities, business relationships, and more.

Check out key highlights across the Tech IPO Pipeline below.

CBI customers: See these companies ranked by Mosaic and revenue

Combining CB Insights’ proprietary data and AI, scouting reports provide insight into each company’s:

• Funding history
• Headcount
• Key opportunities and threats
• IPO prospects
• Mosaic score

For customers, get the full book of 100+ scouting reports using the download button on the lefthand side.

MORE CB INSIGHTS RESEARCH:

• State of Venture Q3’25 Report
• Future Tech Hotshots: 2025: 45 emerging tech startups poised to make an outsized impact
• State of AI Q3’25 Report

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Combining CB Insights’ proprietary data and AI, scouting reports provide insight into each company’s:

• Funding history
• Headcount
• Key takeaways (including opportunities and threats)
• Product/tech focus
• Mosaic score

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If you’re already a customer, log in here.

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The conflict in Ukraine demonstrates the significant impact of these technologies — think low-cost drones destroying $5M tanks — driving European investment in domestic defense systems and supply chains.

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While deals fell in Q3’25, billion-dollar rounds to AI infrastructure players continued to drive the funding surge. But the activity isn’t limited to the largest players: investors are cutting bigger checks across every stage, signaling both conviction in AI’s potential and the high costs of AI development.

Among emerging opportunities, AI agents are a key focus for VCs and enterprises alike, with agent markets leading deal and M&A activity in the quarter.

Below, we break down the top stories from this quarter’s report, including:

• AI deal activity softens, but massive rounds support continued funding boom
• Consolidation remains in full force in the AI market
• Tech market deals highlight AI agent applications, rise of GEO
• The talent premium: AI companies valued at up to ~$100M per employee

Download the full report to access comprehensive CB Insights data and charts on the evolving state of AI across geographies.

AI deal activity softens, but massive rounds support continued funding boom

Deals to private AI companies globally fell 22% quarter-over-quarter in Q3’25, but funding remained above $45B for the fourth consecutive quarter.

Taken together, these trends indicate how top-heavy the AI venture funding landscape has become. 

The average deal size in 2025 YTD is $49.3M — up 86% from 2024. In the last 4 quarters, mega-rounds ($100M+ deals) have accounted for 75%+ funding. The average since 2021 (up to Q3’24) is 53%. 

At the same time, check sizes are trending bigger at the median across every stage this year. For example, the median early-stage deal is $3.4M in 2025 YTD, up from $2.5M in 2024. 

Investors are funneling capital into fewer, larger bets on perceived AI winners, driven by the massive infrastructure costs and competitive dynamics of foundation model development.

In Q3’25, there were 6 $1B+ rounds alone. The top 3 deals went to LLM developers — Anthropic ($13B, Series F), OpenAI ($8.3B, PE), and Mistral AI ($1.5B, Series C) — reflecting the high cost of frontier model development. While OpenAI hit $12B in annualized revenue in July 2025, it’s projecting roughly $8B in cash burn this year per reports. 

Other infrastructure players like Nscale (AI data centers, $1.1B Series B) and Groq (AI inference processors, $750M, Series E) were also in the top 10. The raises are indicative of the growth and attention technologies enabling AI are receiving, with earnings call mentions of data centers hitting record levels in Q3’25 and AI training & inference chips on track for record equity deal & funding activity this year.

Consolidation remains in full force in the AI market

The AI market is a hotbed for M&A activity. 

Q3’25 marks the second highest quarter on record for AI startup M&A (172 deals), following Q2’25 (181 deals). The US continues to gain share, with startups based in the country accounting for 59% of total exits, the highest share since Q2’21. 

Three of the top 5 exits in the quarter were related to AI agents: 

• Workday acquired Sana Labs, a company focused on enterprise workflows, for $1.1B. 
• NiCE acquired customer support startup Cognigy for $955M. 
• Atlassian acquired The Browser Company, the maker of the Arc and Dia AI browsers, for $610M. 

The activity signals enterprise software incumbents are looking to buy their way into accelerating their AI roadmaps. Workday was the second most active acquirer in the quarter with 3 acquisitions (behind Salesforce, with 4 acquisitions). The HR & finance software company also picked up agent builder Flowise and AI-powered recruiting platform Paradox.

Meanwhile, Meta made its first publicly disclosed acquisitions since 2022, acquiring voice AI startups Play AI and WaveForms AI.

Other notable top exits include AI security companies Lakera (acquired by Check Point for $300M) and Prompt Security (acquired by SentinelOne for $250M-$300M). Generative AI is expanding attack surfaces, driving large cyber players to opt for M&A to more quickly integrate AI security features into existing offerings.

Both Lakera and Prompt Security were founded less than 5 years ago, far “younger” than the average time to exit of 9.7 years in the quarter, underscoring how rapidly AI security has become mission-critical.

Review the AI security startups that are ripe for acquisition next in this brief.

Tech market deals highlight AI agent applications, rise of GEO

Among the 1,500+ tech markets that CB Insights tracks, those in the chart below saw the greatest number of AI deals in Q3’25 (note: companies may appear in multiple markets).

Industrial humanoid robot developers and coding AI agents & copilots remained at the top, while LLM developers also climbed back up in the rankings from Q2’25.  

One notable rising market is generative engine optimization (GEO), which refers to tools that help brands optimize their visibility in AI search platforms like ChatGPT and Perplexity. This emerging category (the most nascent in the list based on CBI Commercial Maturity scores) addresses the shift toward shopping and discovery happening on top of LLM interfaces.

OpenAI’s September 2025 launch of in-platform shopping capabilities in ChatGPT underscores this trend, establishing AI platforms as new commerce channels requiring specialized optimization strategies.

Using CB Insights’ Mosaic score — which measures private company health and predicts likelihood of success — we analyzed more than 20 GEO companies, ranking them by 1-year Mosaic score growth to identify the fastest-rising vendors. 

See the GEO partners best positioned to help brands win in AI search here. 

The talent premium: AI companies valued at up to ~$100M per employee

AI companies with lean headcounts and breakthrough potential are attracting sky-high valuations.

Humanoid robotics developer Figure leads the pack in Q3’25 at $104.3M per employee on a $39B valuation, despite reporting no revenue last year (though projecting $9B by 2029). Cognition follows with $98.1M per employee, based on its $10.2B valuation. While the coding AI agent startup has $150M+ in ARR (following its acquisition of Windsurf), this indicates a lofty revenue multiple of ~68x. 

Others topping the quarter’s valuation-per-employee list span the AI model (Anthropic, Mistral AI, Decart, Harmonic), infrastructure (Baseten), and application layers (OpenEvidence,  Sierra, Irregular). 

Whether these valuations prove prescient or overextended will largely depend on whether these companies can deliver on ambitious revenue projections in the years ahead.

RELATED RESOURCES FROM CB INSIGHTS:

• State of Venture Q3’25 Report
• State of Fintech Q3’25 Report
• State of AI Q2’25 Report
• State of Digital Health Q2’25 Report
• State of Tech Exits H1’25

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Space cybersecurity is now a necessary defense, protecting satellites, ground stations, and mission operations from cyberattacks throughout their lifecycles. The threat is intensifying as large satellite constellations expand the attack surface and quantum computing shows potential to break current encryption standards.

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As global competition intensifies and supply chains fracture, the ability to deploy capital into technologies that make the US more self-reliant, adaptive, and secure has become a national priority. 

JPMorgan Chase’s initiative is designed to meet that moment, representing both a financing bonanza for US-based companies across the 27 strategic sub-areas identified by the banking giant and a capital deployment challenge. 

To help, we’ve used CB Insights’ predictive signals, including our outlook score for company success, Mosaic, to shortlist 79 companies for JPMorgan Chase to consider investing in. 

We map them all below, categorized across all but 4 of the strategic areas identified by JPMorgan Chase due to a lack of promising startups matching our criteria — full methodology available at the end of this report. Key recommendations follow.

Find our success and exit predictions for the full list of featured companies here

Key recommendations

Invest in AI as the backbone of manufacturing sovereignty 

A new class of industrial AI startups is aiming to rebuild the nation’s productive capacity across manufacturing, materials, and mobility. 

Companies like Skild AI (robot foundation models), Charge Robotics (factory automation), and Cartken (autonomous mobile robots) are reducing the cost gap for onshore production by automating physical work and logistics. 

Meanwhile, Earth AI and Periodic Labs are applying AI to accelerate materials discovery and secure domestic access to critical minerals and battery inputs. Material development platforms have recently captured investor attention as AI and quantum computing unlock new capabilities, becoming one of the hottest emerging markets (i.e., with a Commercial Maturity median of 3 or below) in the manufacturing sector. 

Source: CB Insights Markets Index (as of 9/9/2025)

Even legacy-heavy domains like shipbuilding are seeing AI-enabled autonomy from firms such as Seasats and Blue Water Autonomy, which aim to reduce costs in a historically high-cost, labor-intensive industry. 

Together, these companies are forming the digital-industrial layer for intelligent reshoring, using AI to make domestic manufacturing faster, adaptive, and globally competitive again.

Bet on autonomous defense systems to redefine deterrence

Modern conflict is evolving faster than traditional defense procurement can adapt, primarily driven by the proliferation of drone warfare with the invasion of Ukraine. A new generation of startups is filling the gap with software-defined, low-cost autonomy. 

Companies like Fortem Technologies (drone detection and interception) and Allen Control Systems (Counter-unmanned systems) are deploying scalable unmanned systems across air and land. Paired with Picogrid’s defense connectivity networks and Rune Technologies’ predictive logistics AI, these platforms create adaptive, sensor-rich meshes that can respond to threats in real time. 

The result is a rapidly emerging autonomous defense ecosystem that strengthens deterrence through speed, intelligence, and distributed resilience.

See the hottest defense tech markets ranked by equity raised over the past year here

Smarter and cleaner energy production and distribution will help maintain AI lead

The AI boom has made energy an ever greater strategic resource, making diversified, digitally managed generation essential to both national security and computational progress. 

Investing in startups focused on nuclear innovation, solar automation, and AI-driven grid resilience will help build a smarter, sovereign energy base. 

Companies like Pacific Fusion and Realta Fusion are redefining what clean baseload power can look like, while Aalo Atomics and Natura Resources advance modular fission systems that can be rapidly deployed near data and industrial centers. 

Paired with Antora and Rondo Energy’s storage systems and David Energy’s automated grid orchestration, these technologies form an adaptive, distributed energy network capable of self-balancing demand spikes from AI compute and industrial electrification. 

See the most promising startups helping manage demand spikes from AI here

Investing in this ecosystem builds not only clean power capacity but also strategic autonomy, ensuring the intelligence revolution runs on domestically controlled, resilient, and low-cost energy.

Support edge intelligence to make AI truly ubiquitous

The frontier of artificial intelligence is shifting from centralized data centers to the physical world, where latency, cost, and privacy demand on-device autonomy. 

Startups like EnCharge AI (compute-in-memory chips) and MemryX (edge inference for automotive and robotics) are re-architecting silicon for real-time decision-making, while Modal and Fireworks AI deliver serverless deployment layers that make model execution as elastic as cloud functions. 

On the software side, Together AI (an AI 100 2025 winner) and Liquid AI are advancing compact, efficient small language models that can run locally, enabling intelligence in drones, sensors, and industrial systems. 

Combined, these technologies are creating a distributed AI fabric that embeds cognition into every node of the economy, from factory floors to vehicles and handhelds. The result: lower latency, greater resilience, and unprecedented reach, as intelligence moves from “in the cloud” to everywhere work gets done.

Track emerging genAI startups, shifting markets, and breakout opportunities in real-time here

Finance the intelligent age security: AI, data, and infrastructure

As AI becomes the backbone of critical systems, the attack surface expands exponentially. 

A new cohort of startups is fortifying this frontier by integrating AI-native security, quantum-safe encryption, and infrastructure hardening into the fabric of the intelligent economy. 

Companies like TXOne Networks and Xage Security are protecting industrial and energy assets with zero-trust architectures built for operational technology, while TrustLogix and Concentric AI safeguard sensitive enterprise data through granular policy enforcement and autonomous monitoring. 

TrustLogix is among the AI security startups most likely to be acquired next, according to CB Insights Predictive Intelligence, as large cyber players have been on a M&A spree to seize this opportunity and integrate AI security features into existing offerings.

See the top AI security startups ranked by their M&A probability

Quantum Xchange ensures secure data transmission with quantum-resistant encryption, and HiddenLayer defends AI models themselves against poisoning, inversion, and adversarial attacks.

Together, these technologies create a secure AI infrastructure stack that spans digital, data, and physical domains, ensuring that as intelligence scales, trust scales with it. Investing in this layer isn’t just about cybersecurity; it’s about protecting the nervous system of the modern economy.

Methodology

We used CB Insights’ predictive intelligence to analyze thousands of startups and select the most promising ones that align with JPMorgan Chase Security and Resiliency Initiative’s 4 key areas and 27 sub-areas.

We looked across our 1,500+ Markets to identify the hottest areas based on equity funding raised over the past year and selected companies with the highest Mosaic scores (min 550) operating in these markets. We focused on private, early to mid-stage (Series B max), US-based startups. Data is as of 10/23/2025.

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This cohort cuts through the noise to spotlight 45 companies we expect to have an outsized, lasting impact over the next 5-10 years — from AI infrastructure that powers autonomous enterprise systems to vertical AI applications in healthcare, financial services, and manufacturing that solve operational problems.

Using CB Insights’ proprietary data — including Commercial Maturity, Mosaic, patents, business relationships, and funding — we identified 45 emerging players most likely to have a strong exit in the next 5-10 years.

See every startup in the Future Tech Hotshots 2025 Expert Collection

Key takeaways

• Agent infrastructure is the new frontier. The cohort reveals a decisive bet on agentic AI, with startups like Coval (AI agent testing), Questflow (multi-agent orchestration), and Syncari (agentic master data management) building the foundational tools that enable autonomous AI to operate reliably at scale. These companies are positioned for outsized impact because they’re creating the critical layer to embed AI into workflows — just as cloud infrastructure enabled SaaS, agent infrastructure will enable the next wave of autonomous enterprise software.

• The 45 hotshots have collectively formed over 110 business relationships since 2024. LLM data preparation company LlamaIndex leads the pack (18 partnerships), having partnered with incumbents like Microsoft and Databricks, while blockchain infrastructure API startup Crossmint has forged partnerships with Visa (to enable AI-driven on-chain payments) and Moneygram (to power new stablecoin cross-border payment experience). As these startups scale over the next 5–10 years, this early validation with enterprise incumbents will become harder to displace as customers build workflows around their products.

• Industrial AI is the most promising area, with companies in this space having experienced the highest Mosaic score increase over the last 6 months. This includes GIS platform Felt (+71 points in 6 months) and humanoid developer Persona AI (+57). This momentum reflects investor and customer recognition that industrial AI creates defensible moats through domain-specific datasets that take years to build. Unlike horizontal tools, this vertical expertise can’t be easily replicated, positioning these companies as prime acquisition targets for industrial incumbents seeking AI capabilities over the next 5-10 years.

• Elite management teams cluster in enterprise infrastructure. Top Management Mosaic scores concentrate in enterprise tech, with Lineaje (962/1000; software supply chain security platform), Maven AGI (956/1000; customer service AI agents), ProRata.ai (950/1000; AI-powered search and advertising), and Harmonic (876/1000; mathematical superintelligence) all led by executives hailing from incumbents like Google, Robinhood, and Stripe. These companies signal that the most experienced founders see enterprise infrastructure — not verticalized or consumer AI — as the category where technical depth and execution create the most competitive advantage.

Methodology

We used CB Insights data to analyze hundreds of VC-backed private tech companies with Mosaic scores of 600+ and an early commercial maturity score. 

Our scoring model factors in signals like investor quality, business relationships, Mosaic scores, key people data, and patents. We excluded companies with fewer than 100 employees. Data is as of 9/29/2025.

For information on reprint rights or other inquiries, please contact reprints@cbinsights.com. 

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This summer, the accelerator that spotted OpenAI, Airbnb, and Stripe before they became household names focused its funding on the production-ready AI layer that incumbents will soon race to acquire or replicate.

For strategy teams, Y Combinator represents both a roadmap of where the venture landscape is heading and a curated list of potential acquisition targets, partners, and competitive threats. 

Using CB Insights, we mapped the 165+ companies in the Y Combinator’s 2025 Summer batch across 11 different categories. Then, we analyzed the cohort to make predictions about what this means for the future of enterprise AI. 

Please click to enlarge.

Note: Categories are not mutually exclusive. For more, see the Y Combinator Summer Batch 2025 Expert Collection here. 

Track the 165+ startups in Y Combinator’s newest cohort

Key Takeaways  

• Voice AI is expanding into regulated industries. 16 companies in the batch are building specialized voice AI systems across use cases. Beyond just consumer assistants (April, Blue), startups in this batch are producing enterprise-grade systems managing complex, regulated interactions, notably in financial services (Altur, Veritus Agent, Qualify.bot, Wayline) — where compliance barriers are highest. Meanwhile, startups like Liva AI and Panels are building voice training data, as proprietary datasets that general-purpose models can’t replicate, creating defensive moats for companies employing voice AI.

• Startups are pushing deeper into software development with specialized solutions. With 20 software development companies in this summer’s Y Combinator batch, the category represents the largest, with coding agents still showing the strongest revenue traction among all AI agent types. However, new entrants are expanding beyond the code generation that enterprises already use. For example, Stagewise (frontend agents for codebases) and Interfere (autonomous de-bugging) are moving beyond just code generation to handle the complete development lifecycle, from writing production-ready code to testing on physical hardware. 

• Y Combinator is betting on the full agent stack, signaling the technology has moved from experimentation to implementation. Nearly 50% of YC’s Summer 2025 cohort offers AI agents, with 14 of those companies focusing specifically on agent infrastructure needed for deployment — spanning agent evaluation (AgentHub), de-bugging (Fulcrum Research), and monitoring (Mohi). Meanwhile, startups like Nozomio Labs (building context augmentation layers for agents) and Imprezia (creating AI-native ad networks) are pushing beyond traditional tooling into novel applications. As agents become table stakes for enterprises, infrastructure tools will become increasingly critical for building and managing reliability and performance at scale.
• The AI infrastructure focus is shifting from capability to efficiency. Companies like Stellon Labs (tiny frontier models for edge devices), Herdora (low-latency GPU inference for voice AI), and DeepAware AI (AI data center energy optimization) signal that deployment constraints — not model performance — are now the primary barrier to AI adoption. Solutions focusing on efficiency constraints like latency, energy costs, and edge deployment are critical for commercial AI deployment.

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The surge was fueled by outsized mega-rounds to new decacorns — companies with $10B+ valuations — and the continued dominance of AI, which accounted for 51% of all funding and 22% of deals in Q3’25.

However, funding growth was far from uniform across sectors. Retail and healthcare saw quarterly declines, while fintech remained flat. The data suggests that investors are pulling back from traditional industries and doubling down on emerging technologies, especially AI.

Below, we break down the top stories from this quarter’s report, including:

• Funding surpassed $90B for the 4th consecutive quarter
• AI is on track to capture over 50% of total annual venture funding for the first time 
• Decacorns raise record funding, as quarterly tech mega-rounds reach a new high
• Humanoid robots captured the most deals for the 2nd quarter in a row
• Exits are rebounding despite companies staying private longer

Let’s dive in.

Download the full report to access comprehensive data and charts on the evolving state of venture across sectors, geographies, and more.

Top stories in Q3’25

1. Funding surpassed $90B for the 4th consecutive quarter

Venture funding exceeded $90B for the fourth consecutive quarter, reaching $95.6B in Q3’25. The year-to-date total surpassed $310B, marking the highest annual figure since 2022.

Deal count, however, fell to its lowest point since Q4’16, underscoring an ongoing trend: investors are writing bigger checks to fewer companies. This pattern has persisted for over a year.

AI maintained its stronghold on the venture market, capturing $47.8B in Q3, for 50% of total funding and 22% of deals. Both figures represent the second-highest quarterly levels on record, confirming AI as the primary driver of venture strength.

While the largest rounds of the quarter went to leading AI players, such as Anthropic and OpenAI, other standout fundraisers included:

• China Fusion Energy, which raised $1.6B to advance fusion reactor engineering and commercialization.
• DBG Health raised $1B to provide a range of healthcare services.
• PsiQuantum, a developer of photonic quantum computers, raised a $1B Series E round.

Investors are also fueling a resurgence in hard tech — particularly in aerospace, defense, and advanced computing: 

• Aerospace funding reached $14.1B through Q3’25 and is expected to reach $18.9B by year-end — surpassing its 2021 record by 20%. 
• Defense tech raised a record $13.7B, driving the emergence of a new military-startup complex. 
• Quantum computing tripled its previous annual funding record, reaching $3.7B.

The data points to a venture market in transition — one defined by larger checks, fewer deals, and a growing concentration of capital in AI and hard tech.

2. AI is on track to capture over 50% of total annual venture funding for the first time

AI companies are capturing a record share of funding and deals this year, at 51% of funding and 22% of deals. They also claimed 7 of the 10 largest rounds this quarter.

The US is proving especially dominant in AI, attracting 85% of total AI funding and 53% of deals in 2025. Four of the 7 largest rounds this quarter were based in the US: Anthropic, OpenAI, Databricks, and Figure.

Funding to AI-enabled companies is also taking a significant share of traditional sectors:

• Retail tech declined to $5.4B, its lowest quarter since Q3’24, with AI startups raising 36% of annual funding.
• Digital health fell to $4.5B, marking its weakest quarter since Q4’24, with AI startups representing 63% of the sector so far this year.
• Fintech remained flat at $10.9B quarterly, with AI firms accounting for 23% of total fintech funding in Q3’25, its 2nd highest quarter on record.

AI is creating a clear split in the venture ecosystem, with AI startups capturing an outsized share of capital and mega-rounds, while non-AI startups face tighter funding conditions.

The rapid rise in AI valuations raises questions about long-term sustainability, as many companies are priced for winner-take-all outcomes across categories, particularly in saturated markets like coding agents & copilots, where dozens of similar startups compete as margins tighten.

The current environment reflects a flight to quality. While AI continues to drive momentum and capital concentration, the market is gradually shifting toward fundamentals — where execution and efficiency, not just promise, will determine which companies justify their valuations.

3. Decacorns raise record funding, as quarterly tech mega-rounds reach a new high

The venture landscape is moving beyond unicorns to decacorns — companies valued at $10B or more. Decacorns raised a record $94.5B through Q3’25, surpassing the previous record of $46.3B in 2024.

However, the number of decacorn deals is almost half as much as it was in 2021 when it reached $45.5B — from 60 deals to 32 this year — revealing the high funding concentration among the very largest companies — primarily leading AI startups.

AI leaders raising at decacorn valuations include developers xAI, Scale, and Perplexity, defense startups Anduril and Helsing, and fintech company Ramp.

Beyond decacorns, $100M+ mega-rounds for tech companies also hit record levels. September saw 52 tech mega-rounds in total, with 70% of capital allocated to companies focused on making AI infrastructure more affordable at scale.

Many AI infrastructure companies that raised mega-rounds in Q3’25 have already generated substantial revenue. Invisible Technologies reached $134M in 2024, Baseten reportedly grew 10x YoY, while Rebellions projected $72M in revenue. This shift separates real businesses from overvalued concepts as scrutiny intensifies.

Decacorns and mega-rounds are defining the current venture landscape. The market is bifurcating not only between AI companies and the rest, but also between decacorns and mega-round recipients vs. everyone else.

We expect the gap between well-funded companies and the rest of the venture ecosystem to continue widening as capital concentrates among market leaders who are building critical infrastructure and enterprise solutions.

4. Humanoid robots captured the most deals for the 2nd quarter in a row

AI markets dominated the most active deals in Q3’25, including AI-powered humanoids, AI software applications, and autonomous driving. 

Industrial humanoid robots captured 17 deals — more than any other market — continuing momentum from Q2’25, when it also led with 23 deals. New humanoid robot unicorns also emerged — Zhiyuan Robot and Unitree Robotics — bringing the total to 4.

Humanoid deal activity extended outside of the industrial sector in Q3. Healthcare humanoid robots secured 7 deals, ranking just outside of the top 10 markets. Figure led both the industrial and healthcare humanoid markets, raising a $1B Series C round at a $39B valuation, making it the 9th most valuable private company globally.

Investor interest in humanoid robots is driven partly by physical AI enabling new robotics capabilities, giving humanoids commercial promise that was not previously possible.

But despite deal activity and future potential, humanoids remain years away from widespread deployment. Developers still face fundamental challenges with inference, dexterity, reliability, and cost, which limit initial use cases to structured environments like factories and warehouses with a controlled and predictable set of tasks.

Autonomous driving showed particular strength among markets powered by physical AI. Both autonomous trucking systems and autonomous driving systems captured 8 deals each, ranking among the most active markets by deal count, alongside prominent AI categories such as coding AI agents, AI agent development platforms, and LLM developers.

5. Exits are rebounding despite companies staying private longer

Exits are recovering, but the numbers also reveal a fundamental shift in how long startups remain private before going public or getting acquired.

M&A and IPO activity both rebounded in Q3’25, partly driven by maturing AI startups that created more exit opportunities. M&A deals rose 8% from last quarter to 2,324 — the highest total since Q3’22. AI M&A activity remained elevated at 172 deals, contributing to the increase.

Fintech M&A contributed heavily to the rebound, rising to 249 deals — its highest level since Q1’22. Healthcare M&A also hit its strongest level since Q1’23, with 3 of the top 10 M&A transactions going to healthcare companies.

IPO activity climbed 45% from 95 to 138 — the highest quarterly total since Q3’23. AI and fintech contributed to the uptick, but software companies dominated the largest offerings. The biggest IPOs went to Figma and Klarna. The only hardware exception was China-based Best Semi, a semiconductor equipment manufacturer.

The Q3 exit rebound reflects improving conditions and suggests a broader recovery ahead, especially if interest rates continue to decline.

Despite increased exit activity, companies are staying private longer, with the time to exit rising from 12.2 years in 2015 to 15.9 years in 2025.

The ability to raise at decacorn valuations while staying private removes the pressure to go public for capital. Companies can now scale to a massive size, hire top talent through liquid secondary markets, and maintain founder control — all without the quarterly earnings pressure or regulatory burdens associated with going public.

Exit levels are recovering, suggesting that the market is normalizing, but the structural shift toward longer private tenures is likely to remain. The venture lifecycle is undergoing a fundamental change, with companies now possessing viable paths to scale privately that did not exist a decade ago.

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RELATED RESOURCES FROM CB INSIGHTS:

• State of Venture Q2’25 Report
• State of Fintech Q3’25 Report
• State of AI Q2’25 Report
• State of Digital Health Q2’25 Report
• State of Insurtech Q2’25 Report
• State of Tech Exits H1’25

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In September, private companies globally raised 1,400+ early-stage rounds (noting this total will rise as more deals are published retroactively). Over 25% of startups that raised rounds are building AI-enabled products and services.

Download the full report to access comprehensive CB Insights data on early-stage activity, including top investors & deals, valuation data, and our predictive signals. Below, we highlight notable trends to watch.

Emerging trends & categories to watch

Click the links to see underlying deal activity. Categories are not mutually exclusive. 

Review the full deal dataset

AI agents

Similar to last month, companies targeting AI agent applications raised over 50 deals (out of 1,485). Key trends to note include: 

• “Smart Money” is all in on AI agents: The top 25 VCs identified by CB Insights backed 13 AI agent startups in September. This represents nearly 20% of all of the early-stage activity from these VCs in the month. Focuses include security (Akto, Fabrix Security, Terra Security) and governance, risk, and compliance (Geordie, Zania), indicating enterprise adoption and risk management are key investment priorities. 
• Customer service is one of the most established use cases but is still seeing early-stage traction: AI agents handling customer service, support tickets, and user interactions represent one of the largest early-stage agent categories in September (8+ deals). Support operations have clear unit economics, high volume repetitive tasks, and direct cost savings compared to human agents, driving continued activity here. Top companies to watch based on Mosaic scores include Doo (Mosaic: 747) and Rauda AI (Mosaic: 687). 
• Emerging voice AI sector: Voice and phone agents are attracting dedicated investment (6 deals, 11% of agent activity) as investors bet on solutions that can tackle the unique technical challenges of voice interactions (i.e., real-time latency requirements, natural speech processing, emotional intelligence, etc.). Confido Health and Prosper, for example, are focused on healthcare applications. Meanwhile, Vida and Vaani Research are building infrastructure to develop voice AI/phone agents. Review the voice AI development platforms market to compare 30+ vendors in the space.

Robotics

Companies building robots, and the systems that power them, raised over 70 deals in the month. 

Within robotics, defense & security applications led early-stage activity (17 deals, 24% of total robotics activity), reflecting geopolitical tensions driving investment in autonomous defense systems and surveillance.

Other notable traction is in foundation models and operating systems for robots, as investors bet on horizontal platforms (4 deals, 6%):

• The leading September round in this category went to DYNA, which raised a $120M Series A. The company is ranked as a “challenger” in our robot foundation model developers market. 
• Another highlight is InOrbit, which focuses on robot orchestration and was founded by Florian Pestoni and Julian Cerutti, who have experience at a range of large tech companies, including Google, Atlassian, Meta, and IBM. The founders’ strong pedigree is reflected in the company’s CB Insights Management strength score, which ranked the highest of all the companies raising early-stage deals in September.

Management strength score

CB Insights’ Management strength scores (out of 1,000) the founding and management team’s prior achievements and likelihood of achieving future success, like a high-value exit. 

Especially at the earliest stages of the startup lifecycle, the strength of the management team serves as a key signal of potential. 

AI for scientific discovery & materials development 

Three of the largest early-stage rounds of the quarter went to companies looking to accelerate scientific discovery and materials development with AI: 

• Periodic Labs ($300M Series A at $1B valuation)
• Lila Sciences ($235M Series A at $1.23B valuation)
• CuspAI ($100M Series A at $520M valuation) 

Both Periodic Labs and Lila Sciences are also building “autonomous labs” — with AI designing, conducting and iterating on experiments. All 3 companies are operating at Commercial Maturity level 2/5 (Validating), indicating they’re still testing and refining their products.

Methodology

This report includes equity early-stage financings (convertible note, angel, pre-seed, seed, Series A) to private companies in August 2025. We excluded companies that are later-stage that raised an angel round or convertible note in the month. Categorization based on company descriptions.

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Every big tech company and a rapidly growing private market landscape are building agent offerings targeting enterprise use cases and industries from financial services to manufacturing.

For enterprises across sectors, one question is becoming unavoidable: Which AI agent strategies will separate market leaders from those left behind?

Enterprises are under pressure to build and implement agents as these LLM-based systems change how companies operate, hire, and scale.

Across 9 reports, discover where startup innovation is pointing, promising partnership and acquisition targets, and key trends to watch based on CB Insights predictive intelligence. Download the report for free.

This 68-page report covers: 

Foreword from Manlio Carrelli, CEO of CB Insights

Outlook on AI agents

6 AI agent predictions looking into 2026

The AI agent ecosystem — Who are the startups, infrastructure providers, and emerging revenue leaders to watch?

• The AI agent market map
• The AI agent tech stack
• The AI agent revenue race

AI agents make inroads across enterprise workflows — How are agents reshaping coding, customer service, and backend operations at scale?

• Y Combinator’s 2025 Spring batch reveals the future of agentic AI
• Building the agent economy: How cloud leaders are shaping AI’s next frontier
• The summer of vibe coding is over — How reasoning models broke the economics of AI code generation

Industry applications gain momentum — Where are vertical-specific agents gaining adoption and delivering measurable ROI?

• 3 markets fueling the shift to agentic commerce
• The industrial AI agents & copilots market map
• 100 real-world applications of genAI across financial services and insurance

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The catalyst was not a technological breakthrough. It was a war.

When consumer drones started destroying $5M tanks across Ukrainian battlefields, global militaries realized the need to revamp their defense strategies. Silicon Valley noticed too, sparking a defense tech gold rush. Now, Anduril commands a $30.5B valuation, Palantir skyrocketed to become one of the most valuable companies in the world, and hundreds of investors are chasing deals in a market they once ignored.

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Last year, the company completed 134 launches at costs 3X lower than its nearest competitors due to vertical integration, reusable rockets, and economies of scale. These structural advantages underpin a broader space infrastructure strategy.

Its Starlink constellation now operates 65% of all satellites in orbit, with connectivity embedded directly into consumer devices, aviation fleets, and international telecommunication providers. This creates a powerful lock-in that makes it more difficult for competitors to capture market share.

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In August, private companies globally raised 1,140+ early-stage rounds (noting this total will rise as more deals are published retroactively). Investors are backing startups targeting applications from AI agents to aerospace manufacturing.

Download the full report to access comprehensive CB Insights data on early-stage activity, including top investors & deals, valuation data, and our predictive signals. 

Leading industries & tech areas

Startups targeting healthcare & life science, financial services, and enterprise software led early-stage funding activity in August.

AI is ubiquitous across the landscape. Over 30% of startups that raised rounds are building AI-enabled products and services. Companies targeting AI agent applications in particular raised over 50 deals. 

Other focuses include blockchain/crypto (50+ deals) and robotics (50+ deals). FieldAI, which is developing foundation models for robots, raised a $314M Series A at a $2B valuation — the largest early-stage round of the month. 

CBI Customers: Review the full deal dataset

Emerging & frontier tech categories to watch

More niche categories (those with fewer than 20 deals in the month) show a clear focus on “hard tech” across areas like space, quantum computing, and fusion energy. 

Click the links to see underlying deal activity. Categories are not mutually exclusive. 

• Satellite technology (13 deals): The commercialization of low Earth orbit is accelerating with decreasing launch costs and miniaturization enabling new satellite constellations for communications, Earth observation, and more. SpaceX’s success has opened the door for specialized players, like earth observation platform SkyFi. 12 out of the 13 companies that raised early-stage deals in this category in August are based outside of the US in countries like China and India.
• Space services & manufacturing (9 deals): The emerging space economy is driving activity across areas like transportation & logistics from space to earth (Orbital Paradigm) and in space (Orbital Operations). Companies such as Orbital Matter and Catalyx Space are leveraging microgravity to manufacture materials, components, and pharmaceuticals in space. 
• Quantum computing & secure communications (7 deals): Startups are developing quantum hardware, software, and infrastructure to tackle complex problems and keep data safe in the era of quantum technology. Examples include superconducting processors (QuamCore), quantum-inspired software for industries like finance and logistics (QMill), and quantum-secure satellite networks (olee).
• Fusion (4 deals): The AI boom has created a $500B power infrastructure gap for data centers, triggering a race to secure nuclear technology. Fusion represents a longer-term breakthrough that could revolutionize power generation. Startups like Canada-based Fusion Fuel Cycles and Japan-based MiRESSO are focused on producing enabling materials and tech.

Top companies by Management strength score

Especially at the earliest stages of the startup lifecycle, the strength of the management team serves as a key signal of potential. 

Using CB Insights’ Management strength score — which scores the founding and management team’s prior achievements and likelihood of achieving future success, like a high-value exit — these are the top 3 startups in this month’s cohort: 

• Perle (976 out of 1,000) — Founder Ahmed Rashman was previously Head of Supply and Growth at Scale, and has experience across a range of large tech companies including Amazon and Oracle. 
• Lettuce (973) — Founder Ran Harpaz was founding CTO of Globality (valued at $1B in 2019) and former CTO at Hippo Insurance (went public in 2021). 
• Lorikeet (858) — Co-founder Steve Hind previously worked in product at Stripe for 3 years, while co-founder Jamie Hall was a software engineer at Google for nearly 7 years. 

See the rest of the top 10 by Management strength in the full report. 

Methodology

This report includes equity early-stage financings (convertible note, angel, pre-seed, seed, Series A) to private companies in August 2025. We excluded companies that are later-stage that raised an angel round or convertible note in the month. Categorization based on company descriptions.

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Advancements in AI and quantum computing are driving this growth, helping these platforms reach high enough accuracy levels to replace physical trials and rival traditional lab methods, while operating at a fraction of the cost and time.

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To create the 2025 list, we analyzed 10 years of CB Insights’ Business Graph data, evaluating 12,000+ venture firms on portfolio outcomes (unicorns and exits), share of rounds led, portfolio quality via Mosaic Score, capital efficiency, and entry discipline. Smart Money VC portfolios offer a front-row view of where the sharpest investors are placing their bets. Use the list as an early indicator to spot emerging markets and promising founders.

Which VC firms are on the Smart Money list?

Firms are presented in alphabetical order.

1. Accel
2. Andreessen Horowitz
3. Bain Capital Ventures
4. Battery Ventures
5. Bessemer Venture Partners
6. Felicis
7. First Round Capital
8. Founders Fund
9. General Catalyst
10. Google Ventures
11. Greylock Partners
12. Index Ventures
13. Institutional Venture Partners
14. Kleiner Perkins
15. Lightspeed Venture Partners
16. Meritech Capital Partners
17. New Enterprise Associates
18. Norwest Venture Partners
19. Notable Capital
20. Redpoint Ventures
21. Salesforce Ventures
22. Sapphire Ventures
23. Sequoia Capital
24. Spark Capital
25. Thrive Capital

CBI customers: See Smart Money’s latest bets

How Smart Money VCs are outperforming the market

Our 2025 edition of Smart Money VCs:

• 6.5x more likely than the average VC to back a future unicorn
• 2.2x more exits per firm, either through M&A or IPO
• 2.3x higher share of rounds led, shaping pricing and syndicates

Smart Money syndicates amplify signal. The top pairs share dozens of portfolio companies — Sequoia & Andreessen Horowitz (43), General Catalyst & Andreessen Horowitz (42), and Sequoia & Lightspeed (36). Most widely backed across the cohort: Chainguard, Figma, and Wiz (each with 7 Smart Money backers).

Smart Money firms have also been the dominant backers of the AI wave — they backed 52% of new AI unicorns in 2023, 73% in 2024, and 77% in 2025 YTD — and that exposure is translating into outlier outcomes.

Since 2015, Smart Money VCs have backed 80 companies that exited at $10B+ — roughly 100x the $100M median exit. The largest Smart Money exits include Uber ($75.5B, 2019), Coinbase ($65.3B, 2021), and Coupang ($56.6B, 2021).

Mosaic shows where they’re headed next. Smart Money portfolios skew to higher Mosaic Scores — CB Insights’ 0–1,000 predictive rating of private-company health. The average portfolio Mosaic is 628 — about 2.6x the VC norm.

And the edge is most visible at the very top of the distribution: more than 65% of companies in the top 1% of Mosaic Scores are backed by a Smart Money VC. Top firms by average portfolio Mosaic include Meritech (759), IVP (741), and Thrive Capital (688). Standout companies in 2025 include Zepto, Bilt, Glean, Rippling, and Anthropic.

Where Smart Money is deploying now

Smart Money is still leaning into AI — especially agentic applications.

Over the last 18 months, agent-related categories led by deal count: coding agents and copilots (28 deals), agent development platforms (24), enterprise workflow agents and copilots (20), and legal agents and copilots (17). Infrastructure remained active as well, with 17 deals into LLM developers. Top recent AI deals by Mosaic include Glean (enterprise AI agents), Augment Code (coding AI agents), and ElevenLabs (voice AI).

Our M&A probability model points to cybersecurity as the most likely near‑term exit pool among Smart Money portfolios, with companies like Tenex.ai ranking highest. Activity is accelerating — highlighted by Google’s $32B acquisition of Smart Money–backed Wiz in March 2025. For acquirers, targeting Smart Money portfolio or syndicate companies can streamline diligence and post‑deal integration.

Outside the US, cybersecurity is also drawing Smart Money. Since Jan’24, Accel (84 deals), General Catalyst (64), and Lightspeed (55) are the most active by ex‑US deal count; their portfolios include companies like Tines, Cato Networks, and Torq.

Methodology

What is the CB Insights Smart Money list?

The Smart Money list is an unranked collection of the top 25 venture capital firms worldwide. We analyzed 12,000+ venture investors with 10+ unique portfolio companies using 10 years of CB Insights’ Business Graph data (2015–2025) to surface the highest performers via our Smart Money Index.

What makes a VC “smart”?

​​Comparable lists in other asset classes rank firms based on investment performance, but returns data is hard to come by in the VC world, and rates of return can be easily manipulated.

Our methodology factors:

• Portfolio outcomes — unicorn count/share and exit count/share
• Deal leadership — share of rounds led
• Portfolio quality — average CB Insights Mosaic Score
• Capital efficiency — portfolio value created per dollar raised
• Entry discipline — median stage at first check

Inputs were normalized and combined into the Smart Money Index. The top 25 became the 2025 Smart Money cohort.

What can I do with this collection?

Explore the Smart Money Expert Collection on the CB Insights platform to filter deals, build screens, and make faster decisions.

If you are a venture investor and want to submit data on your portfolio companies to allow us to better score you in the future, please reach out to researchanalyst@cbinsights.com.

RELATED RESOURCES FROM CB INSIGHTS:

• All 100 AI unicorns since ChatGPT launched
• State of Tech Exits H1’25
• The top angel investors in AI
• Are AI unicorns starting to move beyond hype?
• Book of Scouting Reports: Enterprise AI Agents

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The endgame is fully orchestrated construction sites where AI coordinates everything from material delivery and site preparation to assembly and inspections. While implementation challenges persist — such as the need for sufficiently advanced AI systems, integration with legacy software, and inconsistent connectivity at remote sites — progress toward this vision is moving forward.

Recent surveys show 92% of construction professionals report improved decision-making capabilities with reality capture technology. Similarly, leading firms like Skanska have developed autonomous AI agents that deliver safety guidance in real-time, while Turner collaborated with Versatile to use its AI-powered crane attachment for improved crane utilization, material handling, and production rates.

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Equity funding to drone developers has reached a record $5.5B already this year. More broadly, the drone market is projected to grow from $73.1B in 2024 to $163.6B by 2030, driven by defense spending, more permissive regulations, and AI advances that enable autonomous navigation, real-time object detection, and mission planning without human intervention.

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M&A volume stayed flat in the first half of the year, and the IPO market remained muted, though there are early signs of a potential second-half recovery. In the meantime, capital continues to flow into private tech companies at record levels, including a surge in secondary transactions. This is giving private tech companies more runway (and more reason) to delay public listings.

New exit models are also gaining traction. From large minority stakes to reverse acqui-hires, big tech companies are finding ways to access talent and technology without triggering regulatory review. These deal structures are starting to reshape how value is created, captured, and distributed across the ecosystem — for founders, investors, and employees alike.

Taken together, these trends point to a broader shift: private markets are becoming the dominant venue for value creation and capture in tech. With that comes the need for better private market investing infrastructure, including real-time data and context, turning private company intelligence into a new competitive advantage. 

Below, we break down the top stories from this first half of the year and our projections for the rest of the year, including:

• AI and $100M+ deals drive tech M&A momentum
• Signs point to tech IPO market rebound in H2’25
• Private tech markets top $2T in equity funding
• Secondaries get bigger and pricier
• New exit models emerge amidst the AI talent war

Download the full report to access comprehensive CB Insights data and charts on the evolving state of tech exits, in partnership with EquityZen.

Top stories in H1’25

1. AI and $100M+ deals drive tech M&A momentum

Tech M&A activity has remained stubbornly flat since Q4’23, stagnating at just over 2,000 transactions per quarter. We project Q3’25 to follow the same trajectory, with 2,040 deals.

Despite flat volume, this year is shaping up to be a record year in terms of M&A deal value, driven by an increase in the number of $100M+ acquisitions. These large transactions represent 4.7% of deal share so far this year, up from 3.8% from all of 2024, and a level not seen since 2021.

AI has also emerged as a bright spot, as corporations race to grab AI tech & talent.

M&A activity in AI reached record levels in Q2’25 at 192 deals, pushing AI’s share of tech M&A to 7.5% so far this year — almost double its share in 2021. Private companies have notably led some of the largest AI acquisitions in the first half of 2025, with OpenAI acquiring Io for $6.5B and Databricks spending $1B to buy Neon. 

The AI race is also pushing big tech companies to rethink their M&A strategy, after years of muted activity. 

Meta scooped up voice AI startups PlayAI and WaveForms this summer — marking its first acquisition since 2022 — in a bid to win the race to build the future of human-machine interactions. The company is betting that voice will become the dominant interface for interacting with AI.

During the company’s Q3’25 earnings call, Apple’s CEO mentioned being open to larger M&A deals to help accelerate its roadmap. This marks a significant move away from Apple’s historical focus on smaller acquisitions.  

Dive into 7 AI-related areas where we expect to see M&A activity this year, as well as high-potential acquisition targets for each, in the free report.

2. Signs point to tech IPO market rebound in H2’25

The global tech IPO market has remained muted during the first half of 2025, with 122 tech companies going public, in line with the numbers from 2024. But recent activity signals things may be picking up.

Figma successfully went public last month, in an IPO often referred to as a test of the public market’s appetite for tech companies. The company was valued at just over $16B at IPO and now boasts a market cap of $39B (as of 8/20/2025).

A few weeks later, crypto exchange platform Bullish followed a similar path, raising $1.1B in at a $5.4B valuation. The company is now trading at a 60%+ premium to its IPO price.

These recent examples have pushed several tech companies (crypto in particular) to announce they had filed to go public, reviving hopes of a tech IPO market rebound. Based on current trends, we project 84 tech IPOs for Q3 ’25 — above the 2-year quarterly average of 72.

Find 40+ blockchain companies with a high probability of going public in the next 2 years

But any rebound is likely to be modest, with private tech companies expected to remain private for longer and the role of IPOs potentially shifting to becoming a clearinghouse rather than a capital-raising mechanism, as predicted by Jared Carmel, Managing Partner, Manhattan Venture Partners:

“We’re witnessing a fundamental shift in how tech companies approach public markets. The average age at IPO has increased dramatically, from under 4 years in 2000 to 12 years in 2015 and nearly 16 years today. I expect this trend to accelerate, with companies staying private for 20+ years becoming the new norm.

The aggressive IPO pops we’ve historically seen are fundamentally unfair to founders and long-term investors who actually built these companies. Over the next several years, you’re going to see VCs, private equity, and sovereign wealth funds step in to extract maximum value before these companies ever go public. When they eventually do an IPO, they’ll go public at fair market value without the pop — essentially using public markets as a clearinghouse rather than a capital-raising mechanism.

This shift is already playing out in the data. We’re seeing record levels of private funding, exceeding $2 trillion in cumulative investment, and explosive growth in secondary transactions. The real value creation and liquidity will increasingly occur in private markets, rather than public ones. With companies staying private for two decades, secondary liquidity becomes absolutely critical — employees, early investors, and founders can’t wait 20 years for an exit.”

3. Private tech markets top $2T in equity funding

Private tech companies are staying private longer and now have more capital than ever to do so. 

Over $2T in cumulative equity funding has poured into private tech markets to date, with 90% raised in just the last decade. That funding has enabled companies to keep scaling before tapping the public markets. Today, startups are going public an average of 16 years after being founded, 4 years later than just a decade ago.

Late-stage rounds have also reached new extremes, with Databricks joining the exclusive “Series K” club in July. Just 16 Series K rounds have ever been raised — half in the last 5 years — signaling the growing normalization of ultra-late-stage private fundraising.

Private market check sizes have also grown dramatically. The past 18 months alone account for the largest Seed, Series A, Series B, Series D, and Series E+ rounds on record. And more dry powder is on the way: a recent executive order in the US is opening the door for 401(k) retirement accounts to invest in private markets, potentially unlocking a new wave of capital for private tech companies.

As regulatory barriers fall and new investment vehicles emerge, private tech company investments will increasingly define institutional — and eventually retail — portfolios. 

But there’s a catch. 

Private companies operate in information shadows, beyond public view. Institutions will increasingly need real-time data and context on companies not subject to quarterly reporting, turning private company intelligence into a new competitive advantage. 

4. Secondaries get bigger and pricier

The last 7 quarters have seen YoY growth in secondary transaction activity among VC-backed companies, with no signs of slowing down. As tech companies stay private longer and valuations continue to climb, secondaries are playing a growing role in providing liquidity.

In August 2025, OpenAI reportedly launched a tender offer at a $500B valuation, a sharp jump from its last reported $300B. The offer gives current and former employees a chance to cash out while attracting new capital from institutional buyers. Canva followed a similar playbook, recently conducting a secondary sale at $42B. That’s $10B higher than its October 2024 valuation, which was also set during a prior secondary transaction.

These moves are helping long-time employees and early investors realize returns, while giving latecomers a shot at high-growth companies.

Investor demand is heating up too. According to EquityZen, average discounts in secondary markets have compressed to just 13% below last-round valuations — the lowest level observed between Q1’23 and Q2’25. That pricing shift reflects growing competition and perceived upside, even in companies potentially years from IPO.

While large players like SpaceX, Ripple, and OpenAI continue to dominate transaction volume, interest is expanding to smaller unicorns and breakout startups. In Q2’25, 7 of EquityZen’s top 10 secondary movers had Mosaic scores over 800 and valuations north of $1B, including names like Axiom Space, Brex, and Skild AI.

Explore 500+ private tech companies with strong secondary potential

As secondary markets mature, they’re reshaping liquidity expectations — and giving investors new ways to get exposure to private tech winners without waiting for the IPO window to reopen.

5. New exit models emerge amidst the AI talent war

The intensifying race for AI talent is driving a new wave of unconventional exits in the tech ecosystem, bypassing traditional M&A while still delivering strategic value to acquirers. 

Tight regulation has pushed big tech companies to shift away from full takeovers and toward deal structures that offer access to technology and, more importantly, talent, without triggering antitrust alarms.

Large minority stakes have emerged as one such mechanism. In Q2’25, Meta invested $14.8B for a 49% stake in Scale, marking the largest private funding round of the quarter. As part of the deal, Meta hired Scale’s CEO and founder, Alexandr Wang. At their current pace, big tech companies are on track to complete 14 corporate minority deals in 2025.

Reverse acqui-hires  — where acquirers buy the team (fully or partially) and license the technology — are also gaining momentum. These hybrid transactions often include lucrative licensing fees that serve as a partial liquidity event for investors.

Notable examples include:

• Google hiring key personnel from Windsurf to join its DeepMind division, including CEO Varun Mohan and co-founder Douglas Chen 
• Amazon hiring key members of Adept
• Microsoft bringing in employees from Inflection AI

These transactions let acquirers cherry-pick talent and assets without facing regulatory hurdles or needing to buy out entire cap tables.

But it’s not just big tech adapting;  major LLM developers are adopting similar tactics. OpenAI and Anthropic have collectively made 3 acqui-hires so far in 2025 — Context.ai, Crossing Minds, and Humanloop.

These nontraditional exits may complicate fundraising and hiring for AI startups, as investors and employees weigh the risk of being bypassed in partial team acquisitions. In response, both groups may begin negotiating protective terms to ensure they aren’t left behind.

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