The startup ecosystem continues to evolve as we enter the second half of 2025. Q2 brought a mix of opportunities and challenges, with artificial intelligence, green technologies, and market pressures significantly shaping the landscape. Looking ahead to Q3, key sectors such as clean energy and AI are expected to dominate, while geopolitical and economic dynamics will remain significant.
Below, we’ll break down the standout trends from Q2 and explore actionable insights for startup teams, founders, and investors as they prepare for Q3.
Key startup trends from Q2 2025
1. Needless to say…
Artificial intelligence continued to capture the spotlight in Q2, with investor interest mimicking the startup valuation highs of 2021. The versatility of AI in applications ranging from healthcare to logistics is driving impressive funding rounds, making it a hotbed for innovation.1
One standout example is Pathos, a clinical-stage biotechnology company using its proprietary platform to accelerate drug development through advanced AI. In May 2025, Pathos reached unicorn status with a $331.82 million Series D funding round and a post-money valuation of $1.6 billion. Strategic partnerships with AstraZeneca and Tempus AI are fueling their research efforts in precision medicine and oncology.2
AI also continues to dominate dealmaking, with ScaleAI's $14.3 billion raise fueling nearly one-third of US VC funding.1 The majority of the fastest-growing unicorns are also AI players: AI note-taking company Abridge, genetic engineering company Colossal Biosciences, coding company Anysphere, AI enterprise search company Glean, legal AI startup Harvey, defense tech startup Shield AI, among others.3
What this means for your startup
- Focus on how AI can solve specific, industry-relevant problems.
- Communicate the scalability and practical applications of your technology when pitching to investors.
- Consider collaborations with established companies to accelerate market penetration.
2. M&A opportunities
The bad news: Fundraising fell 34% year-over-year to $223 billion in the first half of 2025. A soft IPO market and continued declines in VC fundraising signal a cautious outlook.
The better news: The urgent need for liquidity among startups and an oversupply of venture capital are leading to increased merger & acquisition (M&A) deals. Big acquisitions are boosting numbers: OpenAI paid $6.5 billion for Jony Ive's AI hardware startup IO, and Pepsi shelled out $1.95 billion for soda upstart Poppi.1 However, this uplift trend in M&A activity has yet to play out meaningfully. Experts point out that it is still unclear if this positive trend will continue throughout the year.4
This trend offers startups a path out of financial strain while allowing investors to consolidate resources and strengthen portfolio companies.
Tips for startups
- Evaluate potential M&A opportunities as a strategy for growth or financial stability.
- For those aiming to be acquired, work on building robust intellectual property or a product line that complements a potential acquirer’s portfolio.
3. Geopolitical and economic pressures
As we all know, Q2 was marked by notable global uncertainties, including U.S. tariffs and instability in the Middle East. These factors contributed to cautious investment behavior, particularly in traditional sectors.4
Prepare for challenges
- Diversify market focus to avoid heavy reliance on regions affected by geopolitical instability.
- Keep operational costs flexible to weather potential economic downturns.
Outlook for Q3 2025
1. The elite of unicorns
Not only AI unicorns are growing rapidly, but also unicorns from other sectors, according to Crunchbase data. As we start into the second half of 2025, we see that the $5 billion unicorn club is trending up compared to the past few years. Given current market trends and a still-slow exit market, we expect this cohort to continue to grow.3
2. Energy tech in the EU
In Q3, the focus on clean energy and green tech will be further reinforced by initiatives like the European Parliament’s Clean Industrial Deal. This strategy emphasizes balancing industrial competitiveness with climate action, ensuring that economic growth aligns with sustainability goals.
A pivotal element of the plan is the Industrial Decarbonisation Bank, established to scale up investment in clean technologies by focusing on carbon impact, scalability, and supply security. The deal also calls for simplifying regulations, streamlining permitting procedures, and rolling out an action plan for affordable energy, all expected to accelerate innovation and growth for startups in the sector.6
3. Keep watching AI
AI’s dominance won’t fade in Q3. In the US, the major 7 tech companies are on track to spend more than $650 billion on research and development (R&D) over the next year, nearly 23% more than they spent over the previous year.5
From tools improving workplace efficiency to healthcare solutions, AI startups will continue to see growth opportunities. Investors are eyeing specific subfields like edge AI, explainability, and ethics-conscious AI as the next wave of breakthroughs.
Q3 2025 tips for startups
Navigating Q3 requires a readiness to adapt, guided by these essential steps:
- Prioritize scalability: Show how your business can grow sustainably with clear financial strategies.
- Leverage networking opportunities: Attend events, panels, and webinars to connect with key industry players.
- Monitor market signals: Keep a pulse on geopolitical and economic developments to adjust your plans as needed. (We know, this sounds easier than it is.)
Whether you're pursuing new funding or expanding globally, seize the momentum in Q3 and beyond. The time to act is now.
Sources:
1 https://pitchbook.com/news/reports/q2-2025-global-vc-first-look
2 https://forgeglobal.com/insights/startup-trends-q2-2025-newly-minted-unicorns/
3 https://news.crunchbase.com/venture/ultra-unicorn-startups-lead-private-market-2025/
4 https://www.wellington.com/en/insights/venture-capital-mid-year-outlook-5-key-questions
5 https://fsinvestments.com/fs-insights/q3-2025-us-economic-outlook-strong-winds-deep-roots/
6 https://www.europarl.europa.eu/news/en/press-room/20250616IPR28957/clean-industrial-deal-must-marry-industrial-competitiveness-with-climate-action