Business

In 2025 so far, 40% of VC exit value stems from AI, according to PitchBook

Published

2 months ago

October 9, 2025

It’s all happening in AI (and, yes, that’s a Simon and Garfunkel reference).

And if that’s an exaggeration, it barely feels like one: In Q3, AI amounted to 39.5% of deal count, a record, according to PitchBook. AI is sending U.S. dealmaking trends up, as PitchBook estimates that deal count is up about 8% this year, marking the third most active year of the last decade. And when it comes to deal value, the numbers are even more dominant: By Q3 2025, 64.3% of deal value in the U.S. has tracked to AI. Now, the definition of “AI” is pretty broad, but a now undeniable reality has taken hold.

“I think AI has basically become the foundation of VC,” said Kyle Stanford, PitchBook director of U.S. venture research, via email. “It provides a wholly new way for companies to solve challenges, and it is being integrated into every part of the economy. It is still the easy and fast deployment that can drive hyper scaling that VC has looked to for outsized returns. As mentioned above, it’s not a singular technology or subset of companies within a broader industry; it is becoming part of everything.”

This follows through to the much-discussed and long-suffering VC exit environment: In 2025 so far, 40% of the exit deal value also traces back to AI, among them CoreWeave’s IPO. PitchBook says 2025 has seen a record 317 AI exits. But the environment for IPOs and M&A remains dicey, according to PitchBook’s Stanford.

“Exit value is interesting because you have a few strong IPOs, and then quite a few IPOs that maybe got higher billing for the year because of the overall lack of exits,” he told Fortune. “I don’t think many share my view on the IPO market, but I question its real strength given the relatively small pipeline…Many of the IPOs have been crypto firms or companies that might be considered atypical for the overall VC-backed inventory. I do think that the extended period staying private (over the past three years) will lead to some very strong companies listing next year.”

Whether such an over-reliance on AI is healthy for the VC industry is an open question. And of course, intertwined in that question is the ongoing debate du jour: Are we in a bubble? If we are, what does that even mean?

Stanford says he believes the conversation around a bubble should be nuanced. “This hype cycle, or bubble, might drive more tail events,” he said. “The multiples being given to some companies are very high, which might be concerning, but if this is truly the technological shift it is being billed as, then companies shouldn’t be priced in a normal way.”

A thought to this end from Brent Hill, managing partner at Origin Ventures, which just raised a $140 million sixth fund: “The U.S. economy has gone through five major economic eras: agrarian, industrial, information, digital—and now, of course, we’re living in the fifth and maybe most consequential with the artificial intelligence economy.” This ongoing phase will be massive, Hill reckons, noting that “we think that over the next ten years, we’ll see a dramatic impact in the productivity of the U.S. economy that will add somewhere between $2 trillion and $4 trillion to domestic GDP.”

There remains, of course, the question of how unprecedented VC’s all-in reliance on AI really is. We see lots of corollaries to the dotcom bubble, perhaps—but venture was a far smaller, less mature industry then. Karen Page, general partner at B Capital, thinks it’s worth considering the cloud boom.

“Cloud was a fundamental shift—a different way to own your data, to run your data,” she said. “But even so, AI is a different way to access your data. So, this is still leaps and bounds more of a transition.”

There was always, during cloud hype, a sense that brakes were getting pumped. Not so in AI: “There is no fear around AI,” Page said. “There is, instead of fear, a desire to jump in and move fast. So, it’s very different.”

All in all, she and I ultimately settled on the word “unprecedented.”

See you tomorrow,

Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com
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Joey Abrams curated the deals section of today’s newsletter. Subscribe here.

Venture Deals

– Base Power, an Austin, Texas-based energy provider, raised $1 billion in Series C funding. Addition led the round and was joined by Trust Ventures, Valor Equity Partners, Thrive Capital, and others.

– Phagos, a Suresnes, France-based developer of a sustainable alternative to antibiotics, raised $30 million in Series A funding from CapAgro, Hoxton Ventures, CapHorn, Demeter, and others.

– Coinflow, a Chicago, Ill.-based global payments platform, raised $25 million in Series A funding. Pantera Capital led the round and was joined by CMT Digital, Coinbase Ventures, and others.

– Quilter, a Los Angeles, Calif.-based company using AI to build an autonomous PCB layout, raised $25 million in Series B funding. Index Ventures led the round.

– Glue, a San Francisco-based agentic team chat platform, raised $20 million in Series A funding. Abstract Ventures led the round and was joined by Chapter One, Goldcrest Capital, and Craft Ventures.

– Realm.Security, a Boston, Mass.-based security data pipeline, raised $15 million in Series A funding. Jump Capital led the round and was joined by Glasswing Ventures and Accomplice.

– Attuned Intelligence, an Orlando, Fla.-based developer of AI-powered call center agents for hospitals, raised $13 million in seed funding. Radical Ventures and Threshold Ventures led the round.

– AiPrise, a San Francisco-based operating system for global compliance, raised $12.5 million in Series A funding. Headline led the round and was joined by Sixthirty and Correlation.

– Everyset, a Los Angeles, Calif.-based background performer platform for film and television, raised $9 million in funding. Crosslink Capital and Haven Ventures led the round.

– Cyberwave, a Milan, Italy-based company developing an operating layer between AI agents and real-world machines, raised €7 million ($8.1 million) in funding. United Ventures led the round and was joined by The TechShop and others.

– Asterix Food, a Tel Aviv, Israel-based developer of technology using plant cells to produce animal proteins. CPT Capital led the round and was joined by Grok Ventures, ReGen Ventures, and SOSV.

– Dragonfly, a London, U.K.-based software discovery platform, raised $3.5 million in pre-seed funding. Episode 1 led the round and was joined by Dreamcraft, Portfolio Ventures, and angel investors.

– OraLiva, a New York City-based developer of AI-assisted oral cancer detection technology, raised $2 million in seed funding. Dr. Preetpal Sidhu led the round and was joined by DCVC, RTP Angel Fund, and the NYU Innovation Venture Fund.

Private Equity

– Mainsail Partners invested $36 million in Flyntlok, an Anchorage, Alaska-based heavy equipment dealer management system.

– Brenton Point Capital Partners acquired a majority stake in Bobcat of Connecticut, an East Hartford, Conn.-based chain of Bobcat and other industrial equipment dealerships. Financial terms were not disclosed.

– Integrity Landscape Corporation, a portfolio company of Seacoast Capital, acquired Serpico Landscaping, a Hayward, Calif.-based exterior landscaping company. Financial terms were not disclosed.

– Mountaingate Capital acquired a majority stake in Walker Sands, a Chicago, Ill.-based business-to-business growth services agency. Financial terms were not disclosed.

– Wall Street Prep, a portfolio company of The Riverside Company, acquired Financial Edge, a London, U.K.-based provider of new hire training for financial institutions, and Euromoney Learning, a London, U.K.-based catalog of courses for mid-career finance professionals. Financial terms were not disclosed.

People

– Plural, a London, U.K.-based venture capital firm, hired Pierre-Dimitri Gore-Coty as partner. He formerly served as SVP of Delivery at Uber.

– Rockbridge Growth Equity, a Detroit, Mich.-based private equity firm, hired Tony Pulice as partner. He was previously with Huron Capital Partners.

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Business

Trump administration waives part of a Biden-era fine against Southwest Air for canceled flights

Published

49 minutes ago

December 7, 2025

Jace Porter

The U.S. Department of Transportation is waiving part of a fine assessed against Southwest Airlines after the company canceled thousands of flights during a winter storm in 2022.

Under a 2023 settlement reached by the Biden administration, Southwest agreed to a $140 million civil penalty. The government said at the time that the penalty was the largest it had ever imposed on an airline for violating consumer protection laws.

Most of the money went toward compensation for travelers. But Southwest agreed to pay $35 million to the U.S. Treasury. Southwest made a $12 million payment in 2024 and a second $12 million payment earlier this year. But the Transportation Department issued an order Friday waiving the final $11 million payment, which was due Jan. 31, 2026.

The department said Southwest should get credit for significantly improving its on-time performance and investing in network operations.

“DOT believes that this approach is in the public interest as it incentivizes airlines to invest in improving their operations and resiliency, which benefits consumers directly,” the department said in a statement. “This credit structure allows for the benefits of the airline’s investment to be realized by the public, rather than resulting in a government monetary penalty.”

The fine stemmed from a winter storm in December 2022 that paralyzed Southwest’s operations in Denver and Chicago and then snowballed when a crew-rescheduling system couldn’t keep up with the chaos. Ultimately the airline canceled 17,000 flights and stranded more than 2 million travelers.

The Biden administration determined that Southwest had violated the law by failing to help customers who were stranded in airports and hotels, leaving many of them to scramble for other flights. Many who called the airline’s overwhelmed customer service center got busy signals or were stuck on hold for hours.

Even before the settlement, the nation’s fourth-biggest airline by revenue said the meltdown cost it more than $1.1 billion in refunds and reimbursements, extra costs and lost ticket sales over several months.

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Business

Trump slams Democratic congressman as disloyal for not switching parties after pardon

Published

1 hour ago

December 7, 2025

Jace Porter

Trump blasted Cuellar for “Such a lack of LOYALTY,” suggesting the Republican president might have expected the clemency to bolster the GOP’s narrow House majority heading into the 2026 midterm elections.

Cuellar, in a television interview Sunday after Trump’s social media post, said he was a conservative Democrat willing to work with the administration “to see where we can find common ground.” The congressman said he had prayed for the president and the presidency at church that morning “because if the president succeeds, the country succeeds.”

Citing a fellow Texas politician, the late President Lyndon Johnson, Cuellar said he was an American, Texan and Democrat, in that order. “I think anybody that puts party before their country is doing a disservice to their country,” he told Fox News Channel’s “Sunday Morning Futures.”

Trump noted on his Truth Social platform that the Democratic President Joe Biden’s administration had brought the charges against Cuellar and that the congressman, by running once more as a Democrat, was continuing to work with “the same RADICAL LEFT” that wanted him and his wife in prison — “And probably still do!”

“Such a lack of LOYALTY, something that Texas Voters, and Henry’s daughters, will not like. Oh’ well, next time, no more Mr. Nice guy!” Trump said. Cuellar’s two daughters, Christina and Catherine, had sent Trump a letter in November asking that he pardon their parents.

Trump explained his pardon he announced Wednesday as a matter of stopping a “weaponized” prosecution. Cuellar was an outspoken critic of Biden’s immigration policy, a position that Trump saw as a key alignment with the lawmaker.

Cuellar said he has good relationships within his party. “I think the general Democrat Caucus and I, we get along. But they know that I’m an independent voice,” he said.

A party switch would have been an unexpected bonus for Republicans after the GOP-run Legislature redrew the state’s congressional districts this year at Trump’s behest. The Texas maneuver started a mid-decade gerrymandering scramble playing out across multiple states. Trump is trying to defend Republicans’ House majority and avoid a repeat of his first term, when Democrats dominated the House midterms and used a new majority to stymie the administration, launch investigations and twice impeach Trump.

Yet Cuellar’s South Texas district, which includes parts of metro San Antonio, was not one of the Democratic districts that Republicans changed substantially, and Cuellar believes he remains well-positioned to win reelection.

Federal authorities had charged Cuellar and his wife with accepting thousands of dollars in exchange for the congressman advancing the interests of an Azerbaijan-controlled energy company and a bank in Mexico. Cuellar was accused of agreeing to influence legislation favorable to Azerbaijan and deliver a pro-Azerbaijan speech on the floor of the U.S. House.

Cuellar has said he his wife were innocent. The couple’s trial had been set to begin in April.

In the Fox interview, Cuellar insisted that federal authorities tried to entrap him with “a sting operation to try to bribe me, and that failed.”

Cuellar still faces a House Ethics Committee investigation.

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Business

Jerome Powell faces a credibility issue as he tries to satisfy hawks and doves on a divided Fed

Published

2 hours ago

December 7, 2025

Jace Porter

With the Federal Reserve split between increasingly hawkish and increasingly dovish policymakers, Chairman Jerome Powell is due to perform some serious log-rolling when the central bank meets this week.

Another rate cut is a near certainty after the Fed meeting ends on Wednesday, but the main question is what Powell will say about the prospects for more easing next month.

Wall Street expects a hawkish cut, meaning Powell is likely to avoid signaling a January cut to appease Fed hawks, after joining doves to lower rates this month.

“Chair Powell is facing the most divided committee in recent memory,” analysts at Bank of America said in a note on Friday. “Therefore, we think he will attempt to balance the expected rate cut with a hawkish stance at the press conference, just as he did in October.”

But at the same time, the Fed chief has also been insistent that policymakers are not on a pre-determined course and that rate moves depend on the data that come in.

As a result, BofA is doubtful that he can pull off a hawkish cut so easily, considering all the market-moving data that will come out between the two meetings, with some delayed due to the government shutdown.

The week after the Fed meeting, for example, jobs numbers for October and November, October retail sales, and the consumer price index for November will come out. And December readings for those indicators are likely to be released before the next meeting on Jan. 27-28.

“It will be difficult for Powell to send a credibly hawkish signal at the press conference,” analyst said.

BofA still sees a way for him to thread the needle. One option is for Powell to suggest that “significant further weakening” in the jobs data will be necessary to trigger a January cut.

Another option is to argue that 3.5%-3.75%—where benchmark rates would be if the Fed cuts again this week—isn’t restrictive after accounting for inflation, meaning the central bank is no longer weighing on the economy as much.

Similarly, JPMorgan chief U.S. economist Michael Feroli said he expects Powell to stress that after this week’s cut, rates will be close to neutral. So any additional easing would depend on meaningful deterioration in the labor market and not be predicated in risk management.

For now, Wall Street doesn’t expect a January cut, with 25% odds currently being priced in on CME Group’s FedWatch tool. But BofA thinks Powell will likely leave the door open for one.

“We wouldn’t be surprised if markets start pushing more aggressively for a Jan cut in the near term,” analysts predicted. “And the anticipation of this outcome might raise the probability of more dissents in Dec, since hawks might be inclined to dig their heels in instead of compromising.”

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