VC firms are pouring money into specialized tech companies despite broader market uncertainty, with one autonomous vehicle deal leading the way.
Startup funding came roaring back in June, with investors putting more than $10 billion into new companies. That’s a huge jump from recent months and shows that despite economic worries, investors are still willing to write big checks for the right opportunities.
But here’s the twist, while investors have become pickier overall, they’re going all-in on certain types of technology. The biggest winner? Companies that help build self-driving cars, where a single deal made up nearly 6% of all June funding.
Self-Driving Car Company Lands $600M as Industry Heats Up
The month’s biggest deal came from Applied Intuition, which raised $600 million and is now worth $15 billion. The deal was led by investment giants BlackRock and Kleiner Perkins, and it’s about more than just another big funding round, it shows that investors really believe self-driving technology is ready to take off.
Here’s what makes Applied Intuition interesting: they don’t actually make self-driving cars. Instead, they build computer programs that help companies test autonomous vehicles safely. Think of it like a flight simulator for self-driving cars – companies can test how their vehicles handle tricky situations without putting anyone in danger.
The company works with more than just car makers. They help companies in trucking, construction, mining, farming, and even defense test their autonomous systems. This wide reach is part of what makes investors excited about the company’s future.
“Applied Intuition isn’t just betting on passenger cars, they’re positioning themselves across the entire self-driving ecosystem,” said a venture capital executive who knows about the deal but asked not to be named.
Big-name investors like Franklin Templeton, Qatar Investment Authority, and Abu Dhabi Investment Council joined the funding round, along with existing investors like General Catalyst and Fidelity.
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Start Selling for FreeEurope Bets Big on Defense Technology
While Silicon Valley focuses on self-driving cars, European investors are putting serious money into defense technology. This shift comes as global tensions rise and European countries want to become more independent in developing critical technologies.
The numbers are impressive: The European Defence Fund set aside over $1 billion for defense research projects in 2025, part of a bigger $5.4 billion commitment since 2021. The European Investment Fund also put $40 million into a fund that invests in early-stage defense companies.
What’s particularly interesting is the focus on “dual-use” technologies. innovations that work for both military and civilian purposes. Advances in artificial intelligence, robotics, and space technologies can help with national security while also creating business opportunities in regular markets.
Europe’s approach is different from traditional defense spending. Instead of just working with big, established defense contractors, the EU is actively seeking out startups and smaller companies. The goal is to speed up innovation while building a more diverse defense industry.
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Get My ValuationAI Companies Keep Raising Huge Rounds
Artificial intelligence companies continued their strong fundraising performance in June, though the focus has shifted from general AI excitement to more specific applications.
Snorkel AI raised $100 million in a round that valued the company at $1.3 billion. The company solves a specific problem in AI development: the need for properly labeled data to train AI systems. As AI becomes more sophisticated, the demand for this type of service has grown across industries.
Other notable AI deals included LMArena’s $100 million round for AI testing services and TensorWave’s $100 million round for AI infrastructure. These investments show that investors still believe in AI’s potential, even as they become more careful about which companies they back.
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Discover MilesInvestors Are Getting More Cautious
Despite June’s strong funding numbers, the overall venture capital landscape remains careful. A survey by PitchBook found that the percentage of venture investors expecting funding to increase dropped from 58% in late 2024 to just 38% in early 2025.
This caution comes from several factors: changing trade policies, questions about AI’s long-term impact, and difficulty in selling portfolio companies. The institutions that fund venture capital firms have become more selective as they wait for returns from previous investments.
When venture capital firms can’t sell their portfolio companies through acquisitions or public offerings, it creates a domino effect. Without successful exits to return money to their investors, venture firms face pressure to be more selective with new investments.
Where the Money Is Going
The geographic spread of June’s funding shows some clear patterns. U.S.-based startups captured about 71% of global venture funding in the first quarter of 2025, with the San Francisco Bay Area alone accounting for $55 billion in investment.
This concentration reflects Silicon Valley’s established ecosystem and the way successful companies and investors tend to cluster together. However, the significant European defense-tech funding shows that specialized sectors can create their own centers of investment activity.
The trend toward specialized funds focused on specific industries is also starting to influence where money goes. These funds often develop expertise that goes beyond traditional geographic boundaries.
What This Means for Entrepreneurs and Investors
June’s funding patterns offer both good news and warnings for entrepreneurs and investors. The month showed that money is still available for companies solving real problems with differentiated technology. However, the standards for getting investment have gotten much higher.
Successful fundraising now requires more than just a good presentation. Investors want to see proof that companies have found their market, clear plans for making money, and strong competitive advantages. This shift has been especially noticeable in areas like AI, where early excitement has been replaced by more careful evaluation of business models.
The rise of specialized industry expertise also suggests that entrepreneurs might do better targeting investors who understand their specific challenges and opportunities. These specialized investors often provide more than just money, they bring industry knowledge, connections, and patience for the unique timing of different sectors.
What’s Next
June 2025’s funding surge shows both consistency and change in the venture capital world. While total funding returned to strong levels, the underlying trends reflect a more mature and selective market. Investors are focusing their bets on sectors where they see clear long-term opportunities, from self-driving systems to defense technology to specialized AI applications.
This selectivity, while challenging for many startups, may actually make the ecosystem stronger by directing money toward companies with better fundamentals and clearer paths to sustainable growth. For both entrepreneurs and investors, success in this environment requires balancing innovation with practical execution, and staying focused on sectors where new technology meets real market demand.
The big question for the rest of 2025 is whether this selective approach will keep funding levels high or whether broader economic challenges will eventually limit investment activity. For now, the data suggests that while the venture capital market has become more discriminating, it’s still willing to back companies that can show both technological innovation and market success in high-potential sectors.
