After more than three years in the wilderness, venture capital is starting to find its way out. But even as exits and funding rounds are increasing in number, many of the VC-backed startups are still worth a lot less than they were during boom times — and that doesn’t seem likely to change anytime soon. Even some AI companies, which have accounted for more than a third of VC deals, are not immune.
A parsing of the numbers by PitchBook shows how precarious the VC market remains at a time when the stock market continues to hit new all-time highs.
To finally provide exits for investors in VC funds, the unrealistically high valuations that peaked at the end of 2021 have had to come down for many companies. During the second quarter of this year, almost every VC company that went public did so below its peak valuation, according to the private markets data provider. For example, Chime went public at a $9.1 billion valuation, which is a fraction of the $25 billion it was said to be worth at its peak. And four of the six unicorns that went public are trading below their initial day close, PitchBook said.
Meanwhile, some startups still seeking additional rounds of funding from private market investors have also had to lower their expectations. Almost a quarter of such deals last quarter were either down rounds or flat, according to PitchBook. Even 30 percent of AI companies were forced to lower their valuations in their latest rounds.
“Initial market views suggest that companies still face pricing compromises,” PitchBook said.
There is another factor at play in all of this: Trump.
Startups involved in AI, defense tech, national security, fintech, and crypto — and thus “aligned with the political and economic priorities of the Trump administration” — are showing “greater resilience to valuation compression,” PitchBook said in its recent analysis of VC valuations and returns.
“It is no coincidence that stablecoin issuer Circle more than doubled its stock price on its first trading day, buoyed by legislative progress on the GENIUS Act,” the data provider said, referring to the crypto legislation passed by Congress. That said, Circle’s IPO price was 17 percent lower than its peak private valuation, PitchBook noted.
The health of the VC market is also obscured by the concentration of value in its ranks — similarly to what has been seen in the public markets.
During the first half of 2025, AI companies accounted for 65 percent of VC capital and 35 percent of the number of deals.
“Two distinct venture markets are emerging: one for AI and one for everything else,” PitchBook said.
In the second quarter, the five largest deals made up 37 percent of the funding, which is more than double their 17 percent share last year, PitchBook noted. For example, Scale AI’s “pseudo-acquisition” by Meta was the second largest venture deal in history, it said. PitchBook nonetheless found that the “rate of value creation” for AI companies is still “shy” of the 2021 highs.
Another VC trend that is emerging is the use of secondaries to provide liquidity to investors, who remain wary of the sector.
Secondaries have been on a tear in the private equity market but have been slow to take off in VC. PitchBook estimated the annual transaction for VC secondaries to be about $61 billon as of the end of the second quarter — less than 2 percent of total unicorn value. One possible reason is that buyers are demanding a 30 percent to 60 percent discount to face value for older vintages, making sellers reluctant to part with their holdings.
As elsewhere in the VC market, AI is “the crown jewel” for secondaries, followed by other sectors that are expected to fare well during the Trump era, PitchBook added.
