In this quarterly briefing, I'll walk you through the critical data points from Q3 2025's PitchBook-NVCA Venture Monitor and reveal how these market shifts are directly shaping our investment decisions at Florida Funders.

The third quarter delivered momentum we haven't seen in years. But beneath the headline numbers, a more complex story is emerging. One that separates winners from those still waiting for the market to return to "normal", who knows what normal really looks like anymore!

Here's what the data is telling us and how we're acting on it.

The Exit Environment: Finally, Real Movement

Let me start with the good news. Q3 2025 generated $74.5 billion in exit value across 362 exits, marking the strongest quarter since the pandemic era. With year-to-date exit value already surpassing the past three slowdown years combined, we're seeing genuine signs that companies are finding paths to liquidity again.

Seven unicorns completed IPOs during the quarter. Figma's July listing exemplified the new reality. The company was profitable, insulated from tariff risk, and bolstered by AI-powered products. The market rewarded them with a 250% first-day pop. But the critical insight is that Figma seems to be the exception.

Most late-stage startups are still optimizing for growth over profitability. This makes them poor candidates for IPOs in an environment where investors are demanding stronger fundamentals. The lack of a clear peer group ready to follow Figma underscores just how fragile this recovery remains.

The Policy Tailwind Nobody's Talking About

Q3's largest listings revealed a clear advantage for companies whose businesses align with the Trump administration's policy agenda, particularly in AI, space, crypto, and national security.

Look at the numbers:

• Firefly Aerospace went public at a $9.8 billion valuation. That's more than double its Series D valuation just three months prior.
• Gemini debuted at $7.1 billion following the passage of the GENIUS Act.
• Netskope's September IPO at $7.3 billion highlighted the convergence of AI-driven technologies with national security imperatives.

These are deliberate bets on companies whose missions intersect with federal priorities. A pattern we're actively monitoring for our own investment thesis.

Dealmaking: The AI Concentration Continues

The numbers don't lie. AI and machine learning accounted for 57.9% of venture deal value year-to-date, despite representing only 37.5% of deal count. Nine billion-dollar-plus financings in Q3 alone accounted for nearly 40% of the quarter's deal value.

Consider the valuations we're seeing:

• Databricks raised $1 billion at a $100 billion post-money valuation. That's a 61.3% increase from its December 2024 round.
• Anthropic's $13 billion Series F hit a $183 billion valuation. Nearly triple its previous round just six months prior.
• xAI secured $10 billion in July, reaching a $75 billion valuation. That's 50% higher than November 2024.

These are the costs of competing in the AI race. Securing top talent, buying chips, and building infrastructure demands massive capital. But it also raises the bar dramatically for what these businesses must ultimately generate for their investors.

The Bifurcation is Real

Outside of AI megadeals, the market tells a different story. The share of sub-$5 million rounds fell to 50.3% of all VC deals in 2025, down from 57.0% in 2024. A decade low.

Founders are opting for larger raises to extend runways and defer future rounds until market conditions improve.

At Florida Funders, we're seeing this bifurcation as an opportunity. While others chase AI megadeals, we're finding exceptional value in infrastructure-first companies like Autonoma, OpenHome and a new investment coming to market soon in the infra space.

These are businesses that provide the tools and platforms that enable the AI revolution rather than betting on individual applications.

‍

Our Portfolio: Execution Over Hype

Let me be direct about how we performed this quarter, we have been making returns and have prioritized liquidity for our LP’s.

• Fund 1 delivered an exit with our secondary sale of TSO Life. Solid returns in a tough market. This wasn't luck. We positioned ourselves strategically in the secondary market precisely because we understood that traditional liquidity would remain constrained.
• Fund 2 delivered an exit with Chattr selling to a large HCM platform, delivering a near 2x return for the fund. 
• Fund 3 continues to validate our infrastructure-first approach in AI investing. We have also had three markups to date that show a strong portfolio that is still open for investment through the end of this year. 

Several portfolio companies made significant progress this quarter:

• Manifest secured strategic investment from a16z, solidifying its market position.
• Flex closed a large Series B, setting them up for what looks to be our first unicorn.
• Mesh closed a round at $500M, putting them in a position to also become a unicorn. 

This is the formula. Back exceptional founders early, support them through the tough times. Look for companies that truly have the opportunity to breakout and be the best. We have learned a lot about investing over the past almost decade, and one thing is true, it takes a while to get a seat at the table, but we finally have one.  

The Fundraising Reality: Only the Strong Survive

Through Q3, just $45.7 billion was raised across 376 funds. The market is on pace to return to pre-pandemic levels.

The median time to close has stretched to 15.6 months, up from 9.7 in 2022. Of the 2,220 VCs that launched funds during 2021-2022, only 653 have raised a follow-on vehicle. Think about that. Seventy percent of that cohort hasn't closed another fund yet.

The top 10 VC funds captured 42.9% of capital. The highest share in at least a decade. This isn't temporary. It's structural.

At Florida Funders, our strong LP base and performance across Funds 1 and 2 have helped us sustain momentum, with Fund 3 on track for a December 2025 close. 

The Emerging Manager Challenge

The 177 funds closed by emerging managers in 2025 marked a decade low. First-time managers from 2021-2022 are especially challenged, with only 20.4% having raised a follow-on vehicle.

This creates both challenge and opportunity. As the field narrows, those who survive will have less competition for the best deals. But survival requires differentiation, operational excellence, and the ability to generate distributions.

Looking Ahead: The Catalysts We're Watching

Interest Rate Environment

If we see the rate cuts President Trump is advocating for, this could ignite a resurgence in private equity activity. Lower rates would reduce the cost of capital, enabling PE firms to become more aggressive buyers. Potentially providing alternative exit routes for growth-stage companies. We have seen a lot of PE buyers come back to market and we will continue to see more. 

The IPO Pipeline

The next wave of IPOs could set the tone for 2026. Companies like Figma, Cerebras, and Wealthfront need to demonstrate sustained public market performance, especially after lockup periods expire. If they can maintain their valuations, it opens the window wider. If they can't, we're back to square one.

AI Monetization

We're entering the proving phase for AI. Winners will break out fast, and capital will follow. The question isn't whether AI will deliver, rather which companies in the ecosystem will capture the value? Our bet is on infrastructure and orchestration, not just the models themselves. Companies need to be saving or making their customers money, if they are not, it is not something we want to be investing in. 

The Secondary Market Evolution

With an estimated $60 billion market size, secondaries aren't a "Plan B" anymore. They're a strategic pillar. We've already demonstrated this with our Rewst and TSO Life transactions. As more companies stay private longer, secondary liquidity will become increasingly important.

According to Aumni data, nearly 30% of secondaries in the first half of 2025 were purchased at a premium to the most recent equity financing round. That's up from a low of 16% in the first half of 2023. The market is strengthening, and we're positioned to take advantage.

Positioning for What's Next

We predict we’re entering a market defined by concentrated capital, policy-driven opportunities, and a relentless focus on capital efficiency.

The bifurcation between elite startups with seemingly unlimited access to capital and those struggling to raise will only widen. The fundraising environment will remain challenging for all but the most proven managers. 

And the exit market, while improving, will continue to favor profitable companies with clear paths to public listing or strategic acquisition.

At Florida Funders, we're positioned to thrive in this environment precisely because we've never tried to be everything to everyone. Our infrastructure-first approach to AI investments, along with operational support from our partners and team experience, gives us a distinct advantage.

The trifecta I've been talking about remains intact:

1. The most investor-friendly market in two decades
2. Access to the highest quality founders due to our tenure in the VC market
3. A technological revolution driven by AI

When others wait, we move. And we'll keep doing just that.

The data is directional, and the opportunities are real. Position yourself to capitalize on them.

This analysis is based on data from the PitchBook-NVCA Venture Monitor Q3 2025. All portfolio company information reflects Florida Funders' proprietary insights and should not be construed as investment advice.

‍