Friends,
In last month’s newsletter, we discussed how Silicon Valley saw venture funding climb to $95.6 billion, marking four straight quarters of growth, with artificial intelligence (AI) dominating more than half of all capital and decacorns attracting nearly a third of funding. Meanwhile, direct venture secondaries surged as General Partner-led (GP) deals lagged, and sovereign wealth funds reshaped global AI investment — sending over 93% of their $46.4 billion in AI funding to U.S. startups.
This month, we examine how surging venture capital (VC) investment and AI’s dominance are colliding with extended liquidity timelines to reshape capital allocation, exit strategies, and the rise of secondary markets.
According to KPMG’s Q3’25 Venture Pulse Report, global VC investment reached $120.7 billion across 7,579 deals, marking the fourth consecutive quarter of strong growth. Three of the five largest deals originated in the U.S. Exit activity also accelerated: CB Insights reports merger and acquisition (M&A) transactions rose 8% quarter-over-quarter (QoQ) to 2,324 deals — the highest since Q3 2022 — while initial public offering (IPO) activity surged 45% to 138 listings, including multiple billion-dollar U.S. offerings. Meanwhile, AI continues to command unprecedented attention, capturing 51% of all venture funding in 2025 and 23% of Q3 transactions. The U.S. leads this trend, accounting for 85% of global AI funding and 53% of deals, signaling a market increasingly concentrated around mature, AI-driven platforms as investors prioritize scale and regulatory resilience.
This surge in capital sharply contrasts with the liquidity challenges that have plagued the industry in recent years, fueling a boom in secondary transactions — as highlighted in, “Longer VC hold times make liquidity alternatives inevitable.” As IPO timelines stretch, founders, employees, and early investors face mounting pressure to monetize holdings. Once considered taboo, selling stakes early has become a pragmatic response to elongated fund lifecycles and the surplus of VC-backed companies born during the pandemic-era. Direct secondaries have grown from 1.3% of global VC exit value in 2021 to 4.2% in 2024, with $14.7 billion in transactions last year alone. As evergreen funds and AI-driven analytics reshape liquidity strategies, the secondary market is emerging as a critical release valve for an ecosystem balancing record investment with delayed exits.
As always, please do not hesitate to contact us if we can help you brainstorm solutions to a legal or business challenge you are facing or connect you to a potential investor, professional, or entrepreneur.
Spotlight on Foley General Counsel Lunch
Foley General Counsel Lunch | November 14, 2025
Another episode of the Foley Silicon Valley General Counsel Lunch Series was a success, bringing together an impressive group of legal and business leaders for a candid discussion on building a strong compliance culture. Foley’s Louis Lehot, Rajiv Dharnidharka, Gurpreet Bal, André Thiollier, Eric Chow, Kelly Boyd, Matt Caplan, Jeanette Barzelay, Brian Wheeler, Natasha Allen, and Brandee Diamond contributed to the lively dialogue and networking throughout the afternoon.
Key takeaways included the importance of making compliance training both memorable and persistent, developing and practicing crisis playbooks, and assembling the right team well in advance. The group also explored some of the most pressing and controversial topics in compliance today, such as managing communications on ephemeral messaging platforms, addressing AI-powered notetaking tools in video calls, and navigating privilege and discovery issues related to AI large language models.
The event fostered candid conversations and practical insights, reinforcing the value of proactive compliance strategies in an increasingly complex regulatory environment.
Events
Upcoming:
Capital Markets Reception | December 3, 2025
Foley is hosting an exclusive event in partnership with Protiviti and SS&C Intralinks at our Palo Alto office, bringing together CFOs, market experts, and operating partners for an informal conversation on what it takes to be “IPO-ready” heading into 2026. The moderated panel will cover critical topics such as timing an IPO, navigating the evolving SPAC landscape, private-market pressures, dual-track strategies, and real-world stories of managing volatility and last-minute pivots. The evening will conclude with a relaxed cocktail reception, offering attendees the chance to network and gain practical insights for the next wave of public offerings.
Recent:
Extreme Tech Challenge | November 3, 2025
Foley proudly sponsored The Energy Challenge of AI: A Call to Action, a summit dedicated to addressing the growing energy demands of artificial intelligence. The event brought together startups, innovators, investors, corporations, and policymakers to explore solutions for balancing rapid AI innovation with sustainability. Attendees engaged in discussions on breakthroughs in energy-efficient computing, data center optimization, and sustainable power generation, storage, and distribution. The summit provided a unique opportunity to connect with global thought leaders, discover cutting-edge technologies, and forge partnerships aimed at ensuring a future where AI thrives responsibly.
Foley Fall Celebration Reception | October 30, 2025
Foley recently hosted a curated and intimate reception featuring Natasha Allen, Gurpreet Bal, Jeanette Barzelay, Matt Caplan, Eric Chow, Rajiv Dharnidharka, Louis Lehot, Shaalu Mehra, Nick O’Keefe, Lyman Thai, André Thiollier, and Brian Wheeler. The event brought together entrepreneurs, executives, investors, professionals, and counselors for an evening of food, generous pours, and engaging conversation in a beautiful indoor-outdoor venue. It was a wonderful opportunity to connect with friends, and the evening was truly memorable.
Thought Leadership
What’s New in Venture Capital? Update on Q3 2025 Venture Capital Trends
Louis Lehot explores the resurgence of venture capital activity in Q3 2025, highlighting data from KPMG and CB Insights that point to a strong rebound after three challenging years. Global VC investment reached $120.7 billion across 7,579 deals, marking the fourth straight quarter of growth, with the Americas leading late-stage funding and AI dominating the landscape — accounting for over half of total funding this year. Exit activity surged as well, with M&A deals hitting their highest level since 2022 and IPOs climbing 45% quarter-over-quarter, signaling renewed investor confidence and open exit windows. Looking ahead, analysts expect momentum to continue into Q4 and 2026, driven largely by AI’s outsized role in shaping global VC trends.
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Three Trends That Will Define AI in 2026
The AI boom shows no signs of slowing, but 2026 will mark a new phase defined by selectivity and structural resilience. While capital continues to pour into AI at historic levels, funding is increasingly concentrated among mature companies with proven product-market fit and robust legal and regulatory frameworks. Early-stage startups face mounting pressure to scale revenue and retain talent as investors prioritize compliance and defensibility. Expect a shakeout among generic, horizontal AI platforms as capital shifts toward vertical, domain-specific solutions with proprietary data. Meanwhile, liquidity will likely come through strategic M&A and secondary transactions ahead of IPOs, signaling that the next chapter of AI growth is about building durable businesses — not just breakthrough technology.
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Deals
Foley Advises on Sale of Three Hampton Golf-Managed Florida Golf and Country Clubs to Heritage Golf
Foley & Lardner LLP served as legal advisor to Hampton Golf-managed entities in their sale of three premier Florida private golf and country clubs to Heritage Golf Group.
Foley Serves as Legal Advisor to Spathe Systems in its Acquisition by Quiet Professionals
Foley & Lardner LLP served as legal advisor to Spathe Systems LLC in its acquisition by Quiet Professionals LLC, a McNally Capital portfolio company.
Foley Represents Millennium Physician Group in Partnership with veriMED Health Group
Foley & Lardner LLP served as legal advisor to Millennium Physician Group, a Mosaic Health Company and one of the country’s largest independent physician groups, in its partnership with veriMED.
Foley Advises UCare in Agreement with Medica to Preserve Health Coverage in Minnesota
Foley & Lardner LLP served as legal advisor to UCare, a Minnesota-based nonprofit health plan, in its definitive agreement for certain UCare contracts and assets to be acquired by Medica, a nonprofit health plan headquartered in Minnesota.
Foley Represents NEA as a Lead Investor in $50M Funding Round for Fabric8Labs
Foley & Lardner LLP recently represented New Enterprise Associates, Inc. (NEA) as lead investor in the $50 million funding round for Fabric8Labs, the company pioneering electrochemical additive manufacturing (ECAM). NEA was joined by Intel Capital, with participation from existing investors Lam Capital, TDK Ventures, and SE Ventures, as well as new investors Marunouchi Innovation Partners, SK hynix, Ericsson Ventures, Masco Ventures, and Toppan Global Venture Partners.
Foley Guides Coinbase in Strategic Reincorporation to Texas
Foley & Lardner LLP is serving as Texas counsel to Coinbase Global, Inc. in its reincorporation from Delaware to Texas. The company filed with the U.S. Securities and Exchange Commission (SEC) its plans to move to Texas, which has become an increasingly attractive hub for innovative companies and will ensure more predictable opportunities for Coinbase, its shareholders, and its customers.
Foley Secures Third Circuit Dismissal of Securities Fraud Class Action Case
Foley & Lardner LLP secured a significant victory at the U.S. Court of Appeals for the Third Circuit on behalf of Innovative Industrial Properties, Inc. (IIP), obtaining affirmation of a dismissal with prejudice in a federal securities fraud class action.
Foley Represents KeyBank as Sole Lender in $75M Lightshift Energy Project Finance Facility
Foley & Lardner LLP served as legal advisor to KeyBanc Capital Markets (KBCM), the corporate and investment banking arm of Cleveland based KeyCorp (NYSE:KEY) for the $75 million credit facility to support Lightshift Energy’s expanding fleet of battery projects.
Foley Advises Buyer in Acquisition of Sawgrass Marriott Golf Resort & Spa
Foley & Lardner LLP served as legal advisor to the joint venture purchaser of Sawgrass Marriott Golf Resort & Spa in Ponte Vedra Beach, Florida.
Foley Secures Federal Circuit Victory for Fortress Iron in Patent Litigation
Foley & Lardner LLP secured a noninfringement ruling in a precedential decision at the U.S. Court of Appeals for the Federal Circuit Court on behalf of Fortress Iron LP and Fortress Fence Products LLC (Fortress).
Foley Represents Douglas Dynamics in Acquisition of Venco Venturo Industries Assets
Foley & Lardner LLP served as legal advisor to Douglas Dynamics, Inc. (NYSE: PLOW), North America’s premier manufacturer and upfitter of work truck attachments and equipment, in the acquisition of substantially all assets of Venco Venturo Industries LLC.
Foley Represents NCH Corporation in Sale to Solenis
Foley & Lardner LLP served as legal advisor to NCH Corporation, the quality leader and trusted on-site expert in middle-market water treatment and industrial solutions, in its sale to Solenis, a portfolio company of Platinum Equity.
Foley Advises Ignyte Insurance in Sale of Collector Vehicle Business
Foley & Lardner LLP served as insurance compliance and regulatory counsel to Ignyte Insurance, a Carlyle-backed portfolio company, in the $615 million sale of its Collector Vehicle Division to Philadelphia Insurance Companies.
Foley Advises MUFG in First Financing with Dimension Energy
Foley & Lardner LLP advised MUFG Bank Ltd. in its capacity as lead debt syndicator for Dimension Energy’s $412 million community solar project financing package that will support a new 134 MWdc portfolio of 25 community solar projects in Illinois, Maine, New Jersey, New York, Pennsylvania, and Virginia. This is Dimension’s largest construction and term financing to date. The portfolio is anticipated to save subscribers at least 10% on energy bills at a time of increasing national electricity prices.
Additional Articles of Interest
Louis Lehot Discusses Shifting Private Equity Dynamics on Broadcast Retirement Network Podcast
Louis Lehot and Brian Wheeler Publish Analysis of Private Equity Liquidity Trends
Authors
Louis Lehot
Partner, Venture Capital
Silicon Valley | San Francisco | Los Angeles
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