Venture funding in India slowed in the third quarter (Q3) of 2025 amid geopolitical uncertainty, though exit activity surged to a seven-year high, according to Venture Pulse from KPMG Private Enterprise, a quarterly report tracking investment trends globally across major regions around the world.
While investors remained cautious, optimism persisted as initial public offering (IPO)-driven exits lifted sentiment.
Globally venture capital (VC) investment rose from $112 billion in the second quarter of 2025 to $120 billion in the third quarter, driven by robust exit markets and sustained focus on artificial intelligence.
“VC investment results in India this quarter were driven by the speed bump like the US tariffs, but people expect that by the end of November that will settle,” said Nitish Poddar, partner and national leader, Private Equity, KPMG in India.
While interest in India remains high, VC investors have found it difficult to predict what might happen day-to-day, leading them to hold back from making any major funding decisions.
Despite the soft VC investment in Q32025, there continued to be optimism in the market given the growth in startup exit activity — particularly in terms of IPO exits.
During the quarter, IPO activity was quite strong compared to previous quarters.
Given India’s strong macros and vibrant capital market should trade uncertainties be resolved, there is good optimism that VC investment will begin to rebound.
Further IPO activity is also expected over the next few quarters in India.
“The macros are still strong, the capital markets are still vibrant, and a lot of capital has been raised that will need to get deployed — so funding should increase as uncertainties calm,” said Poddar.
“But investors are going to be focused heavily on the path to profitability and cash flows because without those you won’t get a capital market exit.”
The Americas led with $85.1 billion VC investments in Q3’25, while Asia saw muted investment at $16.8 billion.
Artificial intelligence (AI) continued to dominate VC activity, with significant funding rounds for AI model development and applications.
The US accounted for most of the VC investment in the Americas, while Europe saw solid growth.
Global exit value climbed to $149.9 billion, the highest since Q4'21, driven by renewed IPO activity.
Looking ahead to Q4'25, global VC investment is expected to remain stable, with AI continuing to dominate. Robotics and defencetech will also continue to be focus areas.
AI continued to dominate VC investment activity in other regions as well in Q3’25.
In addition to startups engaged in foundational AI model development, venture capital investors worldwide demonstrated increasing interest in AI-powered applications and sector-specific innovations.
Beyond AI, defence technology and space technology garnered significant attention during the quarter, largely due to persistent geopolitical tensions.
Health technology, quantum computing, and alternative energy also maintained strong investor interest throughout Q3’25.
“AI is obviously the biggest ticket right now for VC investors globally.
"If startups aren’t embracing AI in some way, shape, or form, it’s very difficult for them to attract attention,” said Conor Moore, global head, KPMG Private Enterprise, KPMG International.
“Many of the industries where we’re seeing strong investment are being driven in part by AI-driven solutions — like defencetech and healthtech — or by their importance to the AI ecosystem like energy and data centres.”
Looking ahead to Q42025, global VC investment is expected to remain relatively stable, fueled by continued momentum in AI model development, industry-specific AI applications, and AI infrastructure.
Robotics is also anticipated to gain further traction among VC investors over the coming quarter.
Given AI’s dominance, companies without AI-driven capabilities could find it increasingly challenging to attract funding.
However, in regions such as Africa, Latin America, and Southeast Asia, fintech is expected to remain the primary investment focus.
© 2025