Key Takeaways
- • US growth equity fundraising surged 2.1x year-over-year in 2025 to $234 billion, driven primarily by AI-focused rounds that accounted for 57% of total raises and grew 3.3x in value compared to 2024's $109.7 billion.
- • European growth equity markets expanded 44% year-over-year to $49.2 billion in 2025, with software emerging as the largest sector by value ($7.5 billion across 113 rounds), while AI raised $5.3 billion representing 11% of total European fundraising.
- • Mega-round momentum into 2026: xAI closed a $20 billion funding round, OpenAI is negotiating approximately $100 billion, and Anthropic is targeting $10 billion, with approximately $158 billion in growth equity raises already in gestation at the start of 2026—exceeding half of 2025's total annual volume.
- • Wall Street consensus forecasts the S&P 500 will average 7,572 by end-2026 (approximately 10% upside), with investor debate centered on whether rapid earnings growth and falling Fed rates can offset elevated valuations and AI sector concentration risk.
- • Growth equity investors are diversifying AI exposure beyond large language models toward supporting infrastructure (datacenters, semiconductors, quantum) and AI-transformed sectors including autonomous vehicles, defense, legal tech, and robotics, with anticipated 2026 strength in defense, crypto/blockchain, and long-gestation energy technologies (nuclear, fusion).
Summary
The global growth equity market demonstrated exceptional resilience and expansion in 2025, with US markets delivering the most pronounced gains driven by artificial intelligence funding. US growth equity raises reached $234 billion in 2025, representing a 2.1x increase over 2024's $109.7 billion. Within this total, AI-focused fundraising displayed outsized momentum, with AI rounds growing 3.3x in value and capturing 57% of all US growth equity capital raised. This concentration underscores investor conviction in AI infrastructure and applications despite macroeconomic headwinds and ongoing concerns about the capital expenditure requirements of leading large language model companies.
European growth equity markets demonstrated more measured but solid expansion, with total 2025 raises growing 44% year-over-year to $49.2 billion. The regional dynamics differed meaningfully from the US, with AI representing the second-largest sector by capital raised at $5.3 billion (11% of total), up from $2.8 billion in 2024. Software emerged as Europe's largest sector by value, with 113 rounds raising $7.5 billion, overtaking Climate Tech. This sectoral rebalancing reflects geographic differences in AI commercialization maturity and investor prioritization.
The momentum entering 2026 appears robust despite valuation concerns and macro uncertainty. Mega-round activity continued at scale, with xAI closing a $20 billion round and OpenAI reportedly negotiating a $100 billion funding round, while Anthropic is targeting $10 billion. Collectively, approximately $158 billion in growth equity raises are already in gestation at the start of 2026—representing over half of 2025's total annual fundraising volume. This pipeline suggests growth equity capital availability will remain abundant, though concentrated in AI and adjacent infrastructure.
Beyond headline LLM funding, growth equity investors are actively diversifying AI-related exposure across supporting sectors including datacenters, semiconductors, and quantum computing, as well as AI-transformed verticals such as autonomous vehicles, defense technologies, legal tech, and robotics. Rothschild & Co anticipates particular strength in 2026 funding for defense, crypto/blockchain, and long-gestation energy technologies including nuclear and fusion power. The firm also expects realisations to improve as M&A and IPO markets recover from 2024 weakness.
Public equity valuations remain elevated, with consensus forecasts from 18 Wall Street firms projecting an average S&P 500 level of 7,572 by end-2026 (approximately 10% upside from current levels). The central debate among institutional investors concerns whether rapid earnings growth and falling Federal Reserve rates can justify current valuations against structural headwinds including AI sector concentration, elevated multiples, and recession risks.
European growth equity markets demonstrated more measured but solid expansion, with total 2025 raises growing 44% year-over-year to $49.2 billion. The regional dynamics differed meaningfully from the US, with AI representing the second-largest sector by capital raised at $5.3 billion (11% of total), up from $2.8 billion in 2024. Software emerged as Europe's largest sector by value, with 113 rounds raising $7.5 billion, overtaking Climate Tech. This sectoral rebalancing reflects geographic differences in AI commercialization maturity and investor prioritization.
The momentum entering 2026 appears robust despite valuation concerns and macro uncertainty. Mega-round activity continued at scale, with xAI closing a $20 billion round and OpenAI reportedly negotiating a $100 billion funding round, while Anthropic is targeting $10 billion. Collectively, approximately $158 billion in growth equity raises are already in gestation at the start of 2026—representing over half of 2025's total annual fundraising volume. This pipeline suggests growth equity capital availability will remain abundant, though concentrated in AI and adjacent infrastructure.
Beyond headline LLM funding, growth equity investors are actively diversifying AI-related exposure across supporting sectors including datacenters, semiconductors, and quantum computing, as well as AI-transformed verticals such as autonomous vehicles, defense technologies, legal tech, and robotics. Rothschild & Co anticipates particular strength in 2026 funding for defense, crypto/blockchain, and long-gestation energy technologies including nuclear and fusion power. The firm also expects realisations to improve as M&A and IPO markets recover from 2024 weakness.
Public equity valuations remain elevated, with consensus forecasts from 18 Wall Street firms projecting an average S&P 500 level of 7,572 by end-2026 (approximately 10% upside from current levels). The central debate among institutional investors concerns whether rapid earnings growth and falling Federal Reserve rates can justify current valuations against structural headwinds including AI sector concentration, elevated multiples, and recession risks.
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