Beyond the Headlines: Louis Lehot on Q2 Venture Activity

By Louis Lehot, Corporate Attorney, Foley & Lardner LLP

Louis Lehot looks at what’s really driving Q2 venture activity, and the headline number only tells half the story. CB Insights data shows two consecutive quarters above $200 billion, marking one of the strongest stretches on record. However, when you drill down further, deal count is at its lowest point in over a decade. That means a smaller number of mega rounds are propping up the rest of the market. In fact, those mega rounds accounted for 81% of all funding, with one company alone making up 40%.

The Headline Numbers vs. the Real Story

Total funding came in at $212.9 billion for Q2. That’s down 26% quarter-over-quarter. Even so, it’s still the second-highest quarter ever recorded. Deal count, on the other hand, tells a different story: 7,086 deals, down 11% QoQ and hitting a decade low. Meanwhile, the median deal size rose 5% QoQ to $4.2 million. M&A and IPO exits were also down, by 10% and 6% respectively, despite the SpaceX IPO landing as the largest on record.

So what does this actually mean? It means record funding is coupled with a narrowing market. That’s great news for the 263 companies participating in mega rounds. It is not, however, necessarily good news for the broader startup market.

Where Louis Lehot Sees Venture Activity Concentrating

It’s no surprise that blockbuster AI financings are fueling these numbers and keeping quarterly totals elevated. In terms of deal count, industrial humanoid robot developers led the pack, with 20 deals valued at $2.7 billion. Robot foundation model developers followed closely, with 15 deals valued at $9.2 billion.

When you look at deal value instead of deal count, the picture shifts. Large language model (LLM) developers were clearly in the lead, with 12 deals valued at $76.2 billion. Coding AI agents came close behind, with 13 deals valued at $67.3 billion. Legal AI agents weren’t far off either, posting 13 deals valued at $66.2 billion. Mega deals drove a large share of the value in these categories much higher. As a result, deal count likely offers a more accurate read on what market activity really looks like.

Geography: Every Market Is Slowing Down

Every major market saw a decline in deal count this quarter, and all of them saw double-digit drops. North America still led, with 68% of total global funding. Even so, the US showed a 31% decline in deal momentum QoQ. China, the United Kingdom, India, and Japan rounded out the top five countries for deal count.

What This Means for Founders

The takeaway is straightforward: the venture market is increasingly concentrated. Capital remains available, but it’s flowing disproportionately to a small group of large, AI-focused companies. For founders outside that circle, record funding totals should not be mistaken for an easier fundraising environment.

Q2 demonstrated that investor appetite is still substantial. A true market recovery, however, will require more than a handful of blockbuster rounds. It will take broader deal activity, stronger exit markets, and capital reaching a much wider range of companies. This full analysis was originally published on Foley & Lardner’s insights page.

Louis Lehot is a corporate attorney at Foley & Lardner LLP. He advises technology companies, investors, and boards on cross-border M&A, venture capital, and regulatory strategy from Silicon Valley. Learn more about Louis’s practice →