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Executive Summary
Stout is pleased to present our Q2 2025 Venture Capital Industry Update based on the latest data available as of May 31, 2025. This publication is a testament to Stout’s specialized expertise on the U.S. venture capital industry, and it aims to provide you with our insightful analysis, thought-provoking insights, and the latest trends and key market developments.
In this edition, you will find a variety of sections that dive into different aspects of the venture capital landscape, including Market Overview, Pricing Analysis, Fundraising Environment, Secondary Market Trends, Exit Activity, and Geographic Trends. Each section is designed to keep you informed and engaged with the ever-evolving Venture Capital industry.
Venture Capital Environment in Q2 2025
- Slowdown in Venture Capital Activity: During Q2 2025, investors adopted a more cautious approach as the U.S. venture capital environment faced challenges amid constrained IPO activity and delayed exits for later-stage ventures, which reduced liquidity opportunities.
- Increase in Fund Sizes & Fund Count: In Q2 2025, total fund sizes increased to $14 billion, while the number of Vintage and Closed funds rose by 1 but remained low compared to previous quarters, marking the second-lowest quarterly figure in the past five years.
- Fundraising Environment: In Q2 2025, fund sizes increased 28.7% QoQ, while the number of Vintage and Closed funds declined 91.7% YoY. Given deterioration, VC fund performance remains weak, with IRR Medians still negative (-7.8% in Q4 2024). Information Technology Vintage funds outperformed Closed funds for the first time in 2019, and returns in IT and Healthcare have shown a 48.8% correlation over the past six years, signaling alignment between the two sectors.1
- Geographic Trends: In Q2 2025, the U.S. VC environment experienced a sharp decline in activity, with deal count and capital invested down 45.2% and 65.0% QoQ, respectively. All regions saw fewer deals, with the West and South regions experiencing the steepest declines in deal size, down 80.6% and 65.5% QoQ, respectively. This widespread slowdown reflects cautious investor sentiment and economic uncertainty compared to Q1 2025.
- Secondary Transactions: There was a decrease to the deal count of secondary transactions and a decrease to their volume from Q1 2025. This marks a shift from the upward trend of the last two quarters and represents the lowest point since Q1 2024.
Deal Volume and Activity
Venture Capital Deal History
U.S. VC deal activity experienced significant growth, with capital invested surging by 73% in Q4 2024 to $77.2 billion, followed by an 18.5% increase in Q1 2025, reaching a thirteen-quarter high of $91.5 billion. However, deal count declined 10.9% QoQ and 24.8% YoY in Q1 2025, reflecting a shift toward fewer deals but larger investments, emphasizing high-value opportunities.2
U.S. Venture Capital History
Deal and Volume Activity by Funding Stage
Early Stage Deal Count showed a decline in Q1 2025 of 8.8%. Specifically, the Early Stage Capital invested toward early-stage investments decreased by 24.3% in the first quarter of 2025 compared to the last quarter of 2024. While the Late Stage Deal Count in Q1 2025 remained flat, Late Stage investments decreased by 28.7%. The number of deals in Early and Late stage VC investments was down YoY by 23.1% and 19.4%, respectively.
U.S. Venture Capital History by Stage
Historically, Early Stage deals have outnumbered Late Stage deals, a trend that persisted in the first quarter of 2025 with 1,041 Early Stage versus 920 Late Stage deals. However, Late Stage deals continued to attract more capital overall. While Series B funding has traditionally drawn the highest investment, Series A took the lead in Q1 2025, securing $8.91 billion in total capital.3
U.S. Venture Capital Invested by Stage
Pricing Analysis
Pre- and Post-Money Valuation
Total Pre- and Post-Money Valuation Medians exhibited a CAGR (cumulative annual growth rate) of 10.5% and 10.0% respectively since 2015:
Total Pre- and Post-Money Valuation Medians
Broken down by stage, both Pre- and Post-Money Valuation Medians increased since the prior quarter. An outlier to this general trend is Series E, where the Pre-Money Valuation decreased by 38.8% and the Post-Money Valuation decreased by 38.6% QoQ. Series D had the largest upward movement QoQ on both metrics, increasing by 74.4% and 66.1%, respectively.
Median Pre-Money Valuation by Stage
Median Post-Money Valuation by Stage
Total Median Step-Up
The valuation Step-Up serves generally as an indicator for the market sentiment, start-up performance, and investor confidence. There is a material decrease in Step-Up since the 2021 highs that was primarily driven by rapid stock market gains, high risk appetite, and increased funding for venture capital companies.
Total Median Step-Up
Diving into stage-specific Median Step-Ups, we have categorized the stages into two distinct phases: the Early Stages and Later Stages. In the Early Stages, we included Series Seed up until Series B, and for the Later Stages we included Series C up until Series E. Early Stage series are generally characterized by higher Step-Up multiples, and Later Stage series have lower Step-Ups.
Since the prior quarter, the largest upward movement occurred on Series C, as it increased by 40.8%, while the largest downward movement occurred on Series A. The Series C and Series A QoQ trends coincide with the YoY movements, as Series C increased by 68.3% and Series A decreased by 4.5%. Early Stage series ranged between the range of 1.7x to 2.0x. Later Stage series varied between 1.5x and 2.1x.
Median Step-Up by Stage
Secondary Market Trends
Overview
The activity of the VC secondary market increased in Q1 and Q2 2024 but has seen a significant drop in Q3. The trend continued for the current quarter.
There was a decrease of 40.8% to the deal count of secondary transactions and a decrease of 40.1% to their volume from Q1 2025. This marks a shift from the upward trend of the last two quarters and represents the lowest point since Q1 2024.
Transaction Volume and Deal Count of Secondary Transactions
Activity by Sector
Percentage of Transaction Volume by Sector - Q2 2025
The table below includes all the information about the secondary transactions by sector during the past 10 years.
Percentage of Transaction Volume by Sector
|
Quarter |
|
Industrial |
Enterprise Software |
Healthcare |
Consumer & Lifestyle |
FinTech |
Technology Hardware |
FoodTech |
Real Estate |
Transportation |
Energy |
Education |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2Q25 |
|
8.5% |
29.4% |
3.5% |
3.0% |
44.8% |
4.9% |
2.7% |
0.0% |
2.0% |
0.9% |
0.0% |
|
1Q25 |
|
3.5% |
36.1% |
1.3% |
2.3% |
18.5% |
10.8% |
2.0% |
0.0% |
0.7% |
0.6% |
0.0% |
|
4Q24 |
|
20.0% |
36.2% |
0.0% |
5.7% |
24.9% |
5.0% |
0.5% |
0.0% |
0.4% |
1.6% |
0.0% |
|
3Q24 |
|
4.5% |
38.0% |
0.4% |
1.4% |
14.8% |
7.0% |
6.2% |
0.0% |
0.3% |
1.5% |
0.0% |
|
2Q24 |
|
8.1% |
63.5% |
0.0% |
1.4% |
12.3% |
8.2% |
0.9% |
0.0% |
0.4% |
0.7% |
0.3% |
|
1Q24 |
|
8.6% |
62.2% |
2.3% |
2.6% |
15.6% |
2.1% |
0.6% |
0.0% |
0.2% |
0.8% |
0.0% |
|
4Q23 |
|
9.7% |
45.8% |
0.0% |
10.7% |
9.9% |
10.9% |
1.4% |
0.0% |
0.6% |
0.7% |
0.0% |
|
3Q23 |
|
11.6% |
41.7% |
11.0% |
6.0% |
15.7% |
2.1% |
0.6% |
0.1% |
2.1% |
2.7% |
0.0% |
|
2Q23 |
|
9.0% |
48.8% |
0.1% |
3.1% |
13.7% |
0.0% |
6.5% |
0.0% |
1.8% |
0.0% |
0.0% |
|
1Q23 |
|
12.2% |
37.7% |
1.1% |
4.4% |
21.4% |
0.0% |
10.9% |
0.0% |
0.2% |
0.2% |
0.0% |
|
4Q22 |
|
5.9% |
47.5% |
0.1% |
4.9% |
9.9% |
1.2% |
6.1% |
0.0% |
0.8% |
0.2% |
0.0% |
|
3Q22 |
|
15.6% |
24.5% |
3.0% |
7.0% |
32.3% |
0.1% |
4.4% |
0.3% |
0.7% |
0.1% |
0.0% |
|
2Q22 |
|
6.6% |
33.8% |
1.2% |
15.9% |
17.4% |
0.2% |
2.5% |
3.7% |
1.1% |
0.0% |
0.4% |
|
1Q22 |
|
6.2% |
37.8% |
3.7% |
12.9% |
18.6% |
0.3% |
5.2% |
0.4% |
2.1% |
0.4% |
1.9% |
|
4Q21 |
|
5.2% |
37.5% |
1.6% |
11.5% |
19.8% |
0.8% |
4.3% |
0.9% |
6.8% |
0.0% |
1.1% |
|
3Q21 |
|
5.4% |
46.2% |
0.3% |
5.4% |
18.8% |
0.1% |
3.1% |
0.0% |
1.8% |
0.6% |
3.2% |
|
2Q21 |
|
3.4% |
33.6% |
2.4% |
6.0% |
25.9% |
0.6% |
8.0% |
1.4% |
1.7% |
0.0% |
0.9% |
|
1Q21 |
|
7.9% |
20.4% |
1.9% |
5.9% |
34.4% |
0.4% |
5.4% |
0.7% |
10.0% |
0.0% |
2.5% |
|
4Q20 |
|
18.9% |
16.0% |
1.4% |
3.7% |
33.4% |
0.0% |
6.6% |
0.8% |
6.8% |
0.0% |
0.8% |
|
3Q20 |
|
11.2% |
39.1% |
0.6% |
2.1% |
13.1% |
0.0% |
17.0% |
0.2% |
1.0% |
0.0% |
0.6% |
|
2Q20 |
|
18.0% |
11.8% |
1.1% |
23.8% |
13.6% |
0.0% |
3.1% |
0.3% |
19.4% |
0.1% |
0.8% |
|
1Q20 |
|
15.6% |
24.5% |
1.1% |
8.6% |
20.2% |
0.0% |
8.0% |
7.6% |
0.6% |
0.0% |
0.0% |
|
4Q19 |
|
5.4% |
34.8% |
6.2% |
12.4% |
13.3% |
0.0% |
5.8% |
0.1% |
11.5% |
0.0% |
0.0% |
|
3Q19 |
|
2.9% |
22.8% |
0.4% |
13.3% |
18.0% |
0.0% |
14.4% |
0.0% |
21.3% |
0.0% |
0.0% |
|
2Q19 |
|
4.2% |
35.7% |
2.8% |
43.1% |
5.3% |
0.0% |
4.3% |
0.0% |
1.5% |
0.0% |
0.0% |
|
1Q19 |
|
0.3% |
39.0% |
39.7% |
0.8% |
2.6% |
0.0% |
0.2% |
0.0% |
6.1% |
0.0% |
0.0% |
|
4Q18 |
|
0.7% |
14.8% |
8.1% |
18.4% |
8.9% |
0.0% |
0.0% |
0.0% |
32.6% |
0.0% |
3.9% |
|
3Q18 |
|
0.3% |
5.2% |
8.5% |
21.9% |
4.1% |
0.0% |
0.0% |
0.0% |
18.3% |
0.0% |
0.6% |
|
2Q18 |
|
2.0% |
7.0% |
14.1% |
32.7% |
19.5% |
0.0% |
0.0% |
0.0% |
13.6% |
0.0% |
0.0% |
|
1Q18 |
|
0.4% |
1.8% |
0.1% |
70.0% |
3.6% |
0.0% |
0.0% |
0.0% |
1.9% |
0.0% |
0.0% |
|
4Q17 |
|
0.0% |
15.3% |
1.6% |
41.5% |
3.8% |
0.0% |
0.0% |
0.0% |
2.2% |
0.0% |
0.0% |
|
3Q17 |
|
0.8% |
29.1% |
3.7% |
27.7% |
27.9% |
0.0% |
0.0% |
0.0% |
0.0% |
0.0% |
0.0% |
|
2Q17 |
|
0.1% |
43.5% |
1.3% |
9.2% |
0.0% |
0.0% |
0.0% |
0.0% |
11.6% |
0.0% |
0.0% |
|
1Q17 |
|
0.0% |
20.4% |
0.1% |
29.9% |
4.7% |
0.0% |
0.0% |
0.0% |
0.3% |
0.0% |
0.0% |
|
4Q16 |
|
0.0% |
20.2% |
0.6% |
21.7% |
0.3% |
0.0% |
0.0% |
0.0% |
22.1% |
0.0% |
0.0% |
|
3Q16 |
|
6.5% |
11.8% |
0.0% |
3.3% |
0.0% |
0.0% |
0.0% |
0.0% |
51.8% |
0.0% |
0.0% |
|
2Q16 |
|
0.0% |
8.3% |
0.2% |
31.0% |
0.0% |
0.0% |
0.0% |
0.0% |
57.4% |
0.0% |
0.0% |
|
1Q16 |
|
0.0% |
29.3% |
1.1% |
9.5% |
0.0% |
0.0% |
0.0% |
0.0% |
36.2% |
0.0% |
0.0% |
|
4Q15 |
|
0.0% |
17.1% |
44.2% |
0.9% |
1.1% |
0.0% |
0.0% |
0.0% |
3.4% |
0.0% |
0.0% |
|
3Q15 |
|
0.0% |
12.4% |
2.2% |
19.4% |
5.1% |
0.0% |
0.0% |
0.0% |
0.0% |
10.5% |
0.0 |
Transaction Volume by Share Class4
Since Q4 2019, common stock has remained the dominant share class in the secondary market, accounting for 56.0% of the total transaction volume in Q2 2025.
Percentage of Transaction Volume by Share Class
Transaction Volume by Buyer Type and by Seller Type
Individual buyers and individual sellers account for 60.6% and 77.8% of the transaction volume, respectively. Over 81.0% of transaction volume involves either individual or institutional sellers and, similarly, over 73.0% of transaction volume involves either individual or institutional buyers. In contrast, only 16.8% involves funds, compared to last quarter's 16.7%.
Percentage of Transaction Volume by Buyer Type
Percentage of Transaction Volume by Seller Type
Exit Activity
Exit Activity and Exit Value
In Q2 2025, Exit activity showed mixed trends. Exits dropped by 34.2% QoQ and 28.4% YoY, while Exit Amounts increased by 36.0% compared to the prior quarter and 17.5% YoY.
Exit per Category5
Merger/Acquisitions led in terms of exit numbers during the first quarter of 2025 but saw a decline of 37.5%, while IPO exits rose 50.0% QoQ. On the other hand, the exit amounts for IPO followed a downward trajectory, decreasing by 87.3% for IPO, opposite to the increase of 212.0% for Merger/Acquisitions.
Historical Number per Exit Category vs. Exit Amount per Exit Category
Exit Environment
Historically, Merger/Acquisitions have accounted for the largest share of exit amounts, a trend that continued into the second quarter of 2025. During this period, the Exit Amounts generated from Merger/Acquisitions were more than double those of IPO and Other types of exits, highlighting their dominant role in driving exit activity.
In Q2 2025, exits dropped by 34.2% QoQ and 28.4% YoY, while Exit Amounts increased by 36.0% compared to the prior quarter and 17.5% YoY. The Information Technology sector led exit activity with 144 exits. Exits in Healthcare fell 89.5%, underscoring weaker investors’ momentum in Healthcare.
- For the purpose of this analysis, we utilized both Vintage and Closed funds for which we had available IRR data as of Q4 2024.
- Based on the latest available data as of Q1 2025.
- Based on the latest available data as of Q1 2025.
- The share classes are Common (includes options and common stock), Preferred (includes all classes of preferred stock), and Units, which indicates that units of a fund were sold.
- Other category consists of Buyouts, Secondary Buyouts, Management Buyouts, Merger of Equals and Reverse Merger.
