Artificial Intelligence (AI) Megadeals Fuel Venture Capital Rebound, but Hide Deepening Geographic and Sectoral Divides

New 2025 venture capital (VC) data from WIPO reveals a sharp AI-driven surge. While global VC activity appears to have regained momentum after the boom-and-bust cycle of 2020–2023, the recovery is uneven, driven largely by AI-related megadeals and heavily concentrated in the United States.

In the Global Innovation Index (GII), VC funding has become a key metric for measuring the vibrancy of innovative start-ups. It reflects both investor confidence and the strength of entrepreneurial ecosystems. The GII Tracker and the GII Innovation Insight Blogs now also report on the global and national VC development on a yearly basis.

VC deal values surge in 2025, while the number of deals continues to shrink

VC deal numbers rose by 47% between Q1 2020 and Q1 2022, increasing from about 11,500 deals to 17,000, an absolute new peak. Since then, they have declined steadily, returning to early-2020 levels two years later (12,000 in Q1 2024) and showing no signs of renewed growth. In Q3 an estimated 9,400 deals were made (see Figure 1), the lowest level since 2020.

Figure 1 Global venture capital deal count, Q1 2020 - Q3 2025

Note: Deal counts for Q4 2024 to Q3 2025 include estimated values of 266, 643, 921and 1779 deals respectively.
Source: WIPO Global Innovation Index, based on Pitchbook.

Global VC deal values, defined as the total amount raised by companies through VC, surged in 2021, surpassing USD 210 billion in Q4 2021, a 171% increase compared to Q1 2020 (see Figure 2). Two years later, in Q4 2023, the total value of deals had fallen back to roughly where it started, around USD 80 billion.

Fast forward to Q3 2025, and this downward trend appears to have reversed, with deal values 44% higher than in the same quarter a year earlier. Yet this apparent recovery masks underlying weaknesses, as it is driven largely by a limited number of very large deals rather than by a broad revival in funding.

Figure 2 Global venture capital deal value, Q1 2020 - Q3 2025

Source: WIPO Global Innovation Index, based on Pitchbook.

Northern America leads as other regions decline

Figures 3 and 4 present the year-over-year quarterly growth rates of the total value of VC deals in Northern America^[1], and the rest of the world. During the boom-and-bust phase between Q1 2020 and roughly Q1 2024, VC values in Northern America and the rest of the world followed broadly parallel growth patterns. Since then, however, the two series have clearly diverged.

Northern America has recorded impressive growth rates above 50% since Q4 2024 with periods of 100 growth in both Q4 2024 and Q1 2025, levels comparable to those observed in 2021. This contrasts with the rest of the world, which has remained mostly in negative territory.

Figure 3 Annual growth rate of VC deal value in Northern America and the rest of the world, Q1 2020 – Q3 2025

Note: In PitchBook’s regional classification, “Northern America” excludes Mexico, which is included in the rest of the world. Growth rates are calculated relative to the same quarter one year earlier.
Source: WIPO Global Innovation Index, based on Pitchbook.

Regarding the number of deals, some divergence emerges starting in 2023. Deal counts have declined gradually in Northern America, while the drop has been sharper elsewhere. Nevertheless, both regions have remained in negative territory since the second half of 2022, with the sole exception of Q2 2024, when Northern America experienced a brief period of growth.

Figure 4 Annual growth rate of VC deal counts in Northern America and the rest of the world, Q1 2020 – Q3 2025

Note: In PitchBook’s regional classification, “Northern America” excludes Mexico, which is included in the rest of the world. Growth rates are calculated relative to the same quarter one year earlier.
Source: WIPO Global Innovation Index, based on Pitchbook.

Geographic concentration intensifies

The investment surge in Northern America has reshaped the geographical distribution of VC activity. As shown in Figure 5, Northern America accounted for around 48% of global VC funding between 2020 and 2023, compared with 17% for Europe and roughly 30% for Asia, with other regions making up about 4%.

So far in 2025, Northern America’s share has risen to almost 70%, with most of the gains coming at the expense of Asia, whose share has fallen to 13% - now roughly equal to Europe’s. Other regions, despite their small overall weight, have remained relatively stable.

Figure 5 Geographical distribution of VC deal values, 2020 - 2025

Note: Data as of 30/09/2025. Mexico is included in Latin America.
Source: WIPO Global Innovation Index, based on Pitchbook.

When looking at the number of deals (Figure 6), the regional shifts are less pronounced. Northern America has gained around six percentage points in its share of deal count since 2023, indicating that the redistribution of VC activity is being driven primarily by deal values rather than deal volumes.

Figure 6 Geographical distribution of VC deal count, 2020 - 2025

Note: Data as of 30/09/2025. Mexico is included in Latin America.
Source: WIPO Global Innovation Index, based on Pitchbook.

The AI boom and the rise of megadeals

The trends described above can largely be attributed to the AI boom, which has attracted exceptionally large late-stage VC deals concentrated in a relatively small number of firms, most of them based in the United States.

To grasp the magnitude of AI’s impact on venture capital, Figure 7 shows the share of AI-related investment in both the number and value of total VC deals. Before the launch of ChatGPT in November 2022, AI accounted for about 20% of both deal value and deal count. Since then, the share of AI in deal value has surged by roughly 30% points to 53%, while its share in deal count has risen by 12 points to 32%.

The widening gap between these two shares highlights how a handful of very large AI deals are driving the overall increase in investment value. Put differently, AI has become the engine of the current VC rebound, but in a way that is highly concentrated across firms, stages and geographies. This trend is also evident when examining the largest global VC deals of 2024. OpenAI raised nearly USD 6 billion, xAI over USD 11 billion, and Anthropic more than USD 8 billion. The trend continued into Q3 2025, with the top three deals, Anthropic (USD 13 billion), xAI (USD 10 billion), and Mistral AI (around USD 1.5 billion), all going to AI companies.

Figure 7 Share of AI in total deal value and total deal count, Q1 2020 – Q3 2025

Source: WIPO Global Innovation Index, based on Pitchbook.

At the geographic level, this concentration translates into an even sharper focus on Northern America. In 2025, Northern America absorbed about USD 162 billion in AI-related VC, more than four-fifths of the global total, while Europe (USD 19 billion) and Asia (USD 9 billion) accounted for only a small share.

Figure 8 Global VC Investment in AI by Region, 2025

Note: Data as of 30/09/2025. Mexico is included in Latin America.
Source: WIPO Global Innovation Index, based on Pitchbook.

What happens next?

Looking ahead, the key question is whether today’s AI-driven, geographically concentrated rebound can evolve into a broader, more inclusive VC upcycle. If the current wave of megadeals translates into productive spillovers – through talent mobility, innovation, and the diffusion of AI capabilities into non-tech sectors and emerging ecosystems – it could lay the foundations for a new phase of global productivity growth. But if capital continues to cluster in a narrow set of late-stage AI champions in a narrow set of locations, the result may be geographic and sectoral divides, with fewer resources available for earlier-stage, non-AI and innovators around the world. Policymakers and ecosystem builders will therefore need to monitor not just the level of VC activity, but also its composition and distribution, and consider targeted measures that crowd in private capital where market gaps persist.

Background

The GII 2025 includes a pillar on market sophistication, featuring four venture capital indicators: 4.2.2 Venture capital deals received by enterprises headquartered in a given economy (per billion PPP$ GDP); 4.2.3 Late-stage VC deal counts received by enterprises headquartered in a given economy (% of all VC deal counts worldwide); 4.2.4 Venture capital deals completed by investors (per billion PPP$ GDP) and 4.2.5 VC deals received by investor location (fractional counts, per billion PPP$ GDP). These metrics are derived from deal‑level data provided by PitchBook Data, Inc. For more information, visit the GII webpage.