Market reflections from KEYtec AG based on the KPMG Venture Pulse Q1’25 report
The global venture capital (VC) landscape experienced a notable rebound in Q1’25, with total funding reaching a 10-quarter high of $126.3 billion, according to the latest KPMG Venture Pulse report. However, while the aggregate investment volume tells one story of renewed optimism, the steep decline in deal count signals another — a market still defined by selectivity, sector concentration, and caution.
Record-breaking investment, driven by AI megadeals
A single factor dominates the quarter’s headlines: AI. The unprecedented $40 billion raise by OpenAI — the largest private funding round in VC history — helped propel the US market to a 13-quarter high of $91.5 billion in venture investment. Other massive AI-related rounds, such as Anthropic ($4.5B) and Infinite Reality ($3B), also contributed to this historic surge.
But it’s important to look past the headline numbers. The global number of VC deals fell to just 7,551, the lowest level in recent memory, signaling a tightening of investment criteria across sectors. Outside of AI, many investors appear to be taking a “wait and see” approach as macroeconomic volatility, trade policy uncertainty, and a dormant IPO market continue to shape decision-making.
Regional outlook: contrasting fortunes
The Americas led the charge with $94.5 billion in funding, representing nearly three-quarters of the global total. In contrast, Europe remained stable in terms of investment value at $18 billion but saw deal volume fall to a six-year low. Asia-Pacific, meanwhile, experienced a sharp downturn, with VC funding falling to $12.9 billion, the lowest regional result in over a decade.
Europe’s VC scene, however, still showed strength in late-stage deal activity. Several megadeals exceeding $500 million (including Binance, Reneo, and Rapyd Financial) underscored investor confidence in later-stage companies with proven models. Germany, the UK, and France remained the key VC hubs on the continent.
Implications for fintech and B2B payments
At KEYtec AG, a Switzerland-based provider of B2B payment infrastructure, we view these developments through the lens of infrastructure resilience and business fundamentals. While artificial intelligence dominates investor attention, many sectors — including payments — continue to focus on pragmatic innovation: regulatory readiness, cross-border interoperability, embedded finance, and fraud mitigation.
AI undoubtedly holds promise in select areas like transaction monitoring and credit scoring, but its adoption in core B2B payment workflows remains limited and gradual. What the current VC climate tells us is that investor capital is flowing to clear, scalable value propositions, whether they are AI-driven or not.
Looking ahead: selective optimism
The outlook for Q2’25 is expected to remain cautious. IPO activity is likely to stay subdued, and deal flow outside of the AI vertical may continue to lag. Yet, sectors that offer clear ROI, operational efficiency, or mission-critical infrastructure — including fintech — are well-positioned to attract capital from strategic investors and corporate VCs.
As capital allocators shift from growth-at-all-costs to profitability and stability, companies that can demonstrate traction and resilience will have an edge.
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