The increase in equity funding for 2025 has sparked plenty of discussion among founders and investors. As someone who’s seen funding climates shift dramatically over the years, I’m fascinated by the forces behind this growth and the patterns emerging from it. By December, 2025 had already overtaken the previous year in total funding raised, yet it wasn’t without its challenges. Let’s examine what drove this rise, the key sectors involved, and what we, as entrepreneurs, can learn.
Why Equity Funding Grew in 2025
The jump wasn’t just about more money flowing into the system; it reflected a crucial shift in market focus. A smaller number of deals dominated, meaning late-stage rounds and high-value startups claimed the lion’s share. For many companies, this meant larger checks but also less room for experimentation at the seed and early stages.
AI, in particular, led this funding surge. European startups in artificial intelligence, defense technologies, and deep tech secured the largest investments. These weren’t just trends; they were the result of investor confidence in clear growth potential. Data from Cherry Bekaert's Private Equity Mid-Year Trends showed significant increases in add-on transactions, with 75.9% of all buyouts in the second quarter of 2025 following this model, reflecting a focus on scaling existing winners.
The Big Numbers: Where the Cash Went
Some of the largest rounds of the year make one thing clear: scaling startups continue to dominate:
- A defense AI company (likely Helsing or similar) closed on €1.4 billion in funding.
- Another European scale-up (such as Mistral AI or its equivalent) raised $814 million.
- A Series R round for an AI company amounted to €936 million.
- Mid-sized rounds like €635 million showed strength in niche markets like renewable technology.
The underlying message here is that deep tech, particularly where AI intersects with industrial applications, drove this funding boom. At the same time, generalist sectors like SaaS seemed to hold back slightly, possibly recovering from longer sales cycles or weaker growth year-on-year.
What Did 2025 Teach Us?
1. Focus is Everything
Investors have become far more selective. If you’re preparing to fundraise, you need razor-sharp messaging and a strong track record. “Spray and pray” is no longer a viable fundraising strategy.
2. Big Players Thrive
Scaling remains the holy grail. For startups unable to show rapid growth or unique IP, the path to funding is increasingly difficult. Early-stage funding supports ideas, but in 2025, mid- and late-stage companies dominated, as evidenced by the surge in funding for larger AI-related ventures.
3. Geopolitics Shapes Tech
Europe’s focus on defense technologies and AI reflects global tensions and the growing drive to invest in sovereign systems. This is a wake-up call for founders who’ve not yet designed their offerings to solve critical or future-proofed challenges.
How to Adapt as a Founder
Here’s your checklist if you want to raise capital successfully in this environment:
- Validate Early and Often: Show tangible results. Even for seed-stage startups, metrics matter more than messaging.
- Understand Current Trends: AI, deep tech, and defense are hot right now, but broad tech solutions are finding it tougher. Align your pitch with what’s working.
- Build for Exit Potential: Exit activity showed promising signs of improvement, as noted in McKinsey’s Review of Global Private Markets. Whether it’s an IPO or a corporate buyout, positioning for exit matters more now.
- Partner Selectively: Investors are looking beyond innovation; they want reliability. Build partnerships with industry leaders to show stability.
Common Mistakes That Could Cost You
While the funding increase is exciting, many founders misstep in ways that make fundraising harder:
- Pitching Too Soon: If your idea hasn’t been stress-tested through customer feedback, you’re not ready to pitch.
- Ignoring Geopolitical Trends: Funding is often directed by macro trends, such as security or sustainability. Position your startup within one of these frameworks.
- Skipping Financial Clarity: Investors need clear pathways to profitability, or at least a format that shows their returns. Fuzzy math won’t fly anymore.
Lessons for Small Startups
Everyone trying to break in at early stages should take this funding climate seriously. The average deal size for late-stage rounds has now reached record levels, making it easy to assume early-stage founders will be overlooked. But there’s opportunity if you craft your pitch well and build traction before seeking outside funds.
The shift to fewer deals means funders reserve cash for promising companies that can show resilience. This offers small, committed teams a chance if they can leverage niche markets or underserved audiences.
Moving Forward Together as Entrepreneurs
2025 taught me, and should teach all founders, to focus on quality over scale. Chasing growth must come with an equal push for profitability and purpose. It’s not an innovation race but a clarity race. As we head into 2026, I encourage my fellow entrepreneurs to take time with the basics: refine your core offer, expand strategically, and remember that massive rounds aren’t the only goal. Having controlled, steady growth might not grab headlines but will position you to expand when the timing’s ideal.
Let’s build ventures that get funded, on the merit of their mission and their proof, not just hype.
FAQ
1. Why did equity funding increase in 2025?
Equity funding surged in 2025 due to larger deals focused on late-stage startups, particularly in AI, defense, and deep tech sectors. These areas inspired investor confidence with their growth potential. Explore funding trends on Cherry Bekaert
2. Which sectors saw the most growth in equity funding?
AI, deep tech, and defense technologies were the biggest beneficiaries, dominating late-stage funding rounds and driving overall growth. Learn more about private equity trends with Bain & Company
3. What types of startups dominated funding in 2025?
Late-stage startups and scaling companies with proven growth records claimed the largest share of investments, reflecting a shift away from early-stage experimentation. Discover insights on private market trends from McKinsey
4. How did AI investments shape equity funding in 2025?
AI startups, especially in industrial and defense applications, secured massive late-stage rounds, highlighting strong investor interest. Check trends in equity funding at Sifted
5. What challenges were faced by early-stage startups?
Seed-stage and early-stage startups struggled for funding due to reduced deal counts as investors prioritized scaling established companies. Read more about private equity challenges at Cherry Bekaert
6. How did geopolitics affect tech funding in 2025?
Global tensions prompted increased investment in sovereign systems, particularly in defense AI, underlining geopolitics' role in shaping funding priorities. Learn more about the private equity outlook at Harvard Law
7. Which major deals defined 2025 equity funding?
Notable deals included a defense AI company's €1.4 billion round and a €936 million round for another AI company, signifying investor focus on established tech leaders. Explore detailed private equity reports by McKinsey
8. How does selective investment impact entrepreneurs?
Founders must demonstrate clear growth and profitability to attract funding, as investors favor reliability and established success. Discover tips for entrepreneurs on Bain & Company
9. What lessons can small startups take from 2025 funding trends?
Small startups should focus on validating their ideas, leveraging niche markets, and proving traction before seeking funding to adapt to a selective investment climate. Read lessons from Sifted
10. What are the next steps for founders aiming for 2026 funding success?
Founders should refine their core offerings, track industry trends, and build sustainable growth strategies aligned with investor priorities. Check funding strategies with PwC
About the Author
Violetta Bonenkamp, also known as MeanCEO, is an experienced startup founder with an impressive educational background including an MBA and four other higher education degrees. She has over 20 years of work experience across multiple countries, including 5 years as a solopreneur and serial entrepreneur. Throughout her startup experience she has applied for multiple startup grants at the EU level, in the Netherlands and Malta, and her startups received quite a few of those. She’s been living, studying and working in many countries around the globe and her extensive multicultural experience has influenced her immensely.
Violetta Bonenkamp's expertise in CAD sector, IP protection and blockchain
Violetta Bonenkamp is recognized as a multidisciplinary expert with significant achievements in the CAD sector, intellectual property (IP) protection, and blockchain technology.
CAD Sector:
- Violetta is the CEO and co-founder of CADChain, a deep tech startup focused on developing IP management software specifically for CAD (Computer-Aided Design) data. CADChain addresses the lack of industry standards for CAD data protection and sharing, using innovative technology to secure and manage design data.
- She has led the company since its inception in 2018, overseeing R&D, PR, and business development, and driving the creation of products for platforms such as Autodesk Inventor, Blender, and SolidWorks.
- Her leadership has been instrumental in scaling CADChain from a small team to a significant player in the deeptech space, with a diverse, international team.
IP Protection:
- Violetta has built deep expertise in intellectual property, combining academic training with practical startup experience. She has taken specialized courses in IP from institutions like WIPO and the EU IPO.
- She is known for sharing actionable strategies for startup IP protection, leveraging both legal and technological approaches, and has published guides and content on this topic for the entrepreneurial community.
- Her work at CADChain directly addresses the need for robust IP protection in the engineering and design industries, integrating cybersecurity and compliance measures to safeguard digital assets.
Blockchain:
- Violetta’s entry into the blockchain sector began with the founding of CADChain, which uses blockchain as a core technology for securing and managing CAD data.
- She holds several certifications in blockchain and has participated in major hackathons and policy forums, such as the OECD Global Blockchain Policy Forum.
- Her expertise extends to applying blockchain for IP management, ensuring data integrity, traceability, and secure sharing in the CAD industry.
Violetta is a true multiple specialist who has built expertise in Linguistics, Education, Business Management, Blockchain, Entrepreneurship, Intellectual Property, Game Design, AI, SEO, Digital Marketing, cyber security and zero code automations. Her extensive educational journey includes a Master of Arts in Linguistics and Education, an Advanced Master in Linguistics from Belgium (2006-2007), an MBA from Blekinge Institute of Technology in Sweden (2006-2008), and an Erasmus Mundus joint program European Master of Higher Education from universities in Norway, Finland, and Portugal (2009).
She is the founder of Fe/male Switch, a startup game that encourages women to enter STEM fields, and also leads CADChain, and multiple other projects like the Directory of 1,000 Startup Cities with a proprietary MeanCEO Index that ranks cities for female entrepreneurs. Violetta created the "gamepreneurship" methodology, which forms the scientific basis of her startup game. She also builds a lot of SEO tools for startups. Her achievements include being named one of the top 100 women in Europe by EU Startups in 2022 and being nominated for Impact Person of the year at the Dutch Blockchain Week. She is an author with Sifted and a speaker at different Universities. Recently she published a book on Startup Idea Validation the right way: from zero to first customers and beyond, launched a Directory of 1,500+ websites for startups to list themselves in order to gain traction and build backlinks and is building MELA AI to help local restaurants in Malta get more visibility online.
For the past several years Violetta has been living between the Netherlands and Malta, while also regularly traveling to different destinations around the globe, usually due to her entrepreneurial activities. This has led her to start writing about different locations and amenities from the POV of an entrepreneur. Here’s her recent article about the best hotels in Italy to work from.
About the Publication
Fe/male Switch is an innovative startup platform designed to empower women entrepreneurs through an immersive, game-like experience. Founded in 2020 during the pandemic "without any funding and without any code," this non-profit initiative has evolved into a comprehensive educational tool for aspiring female entrepreneurs.The platform was co-founded by Violetta Shishkina-Bonenkamp, who serves as CEO and one of the lead authors of the Startup News branch.
Mission and Purpose
Fe/male Switch Foundation was created to address the gender gap in the tech and entrepreneurship space. The platform aims to skill-up future female tech leaders and empower them to create resilient and innovative tech startups through what they call "gamepreneurship". By putting players in a virtual startup village where they must survive and thrive, the startup game allows women to test their entrepreneurial abilities without financial risk.
Key Features
The platform offers a unique blend of news, resources,learning, networking, and practical application within a supportive, female-focused environment:
- Skill Lab: Micro-modules covering essential startup skills
- Virtual Startup Building: Create or join startups and tackle real-world challenges
- AI Co-founder (PlayPal): Guides users through the startup process
- SANDBOX: A testing environment for idea validation before launch
- Wellness Integration: Virtual activities to balance work and self-care
- Marketplace: Buy or sell expert sessions and tutorials
Impact and Growth
Since its inception, Fe/male Switch has shown impressive growth:
- 5,000+ female entrepreneurs in the community
- 100+ startup tools built
- 5,000+ pieces of articles and news written
- 1,000 unique business ideas for women created
Partnerships
Fe/male Switch has formed strategic partnerships to enhance its offerings. In January 2022, it teamed up with global website builder Tilda to provide free access to website building tools and mentorship services for Fe/male Switch participants.
Recognition
Fe/male Switch has received media attention for its innovative approach to closing the gender gap in tech entrepreneurship. The platform has been featured in various publications highlighting its unique "play to learn and earn" model.