The Most Heavily Funded Industry Globally Is Software – But Why Are Investors Becoming Cautious?

Software continues to lead global funding activity across all sectors. Vestd’s Global Investment Report, based on Crunchbase data, recorded 18,282 funding rounds in 2025.

This has been the case since 2023, because software tools are in so many different areas of business activity – it’s almost everywhere now. Companies depend on digital systems to run operations and build or manage the company every day.

Global funding activity has certainly picked up after a difficult year. Vestd recorded 54,408 rounds in 2025, which is a 17.7% increase from 2024. This is still not as high as the 66,126 rounds recorded in 2022, though.

North America leads investment activity with 26,744 rounds. The United States recorded 21,926 deals, which equals close to 40% of global funding activity, according to the report.

Software continues to attract high levels of capital even as funding conditions tighten. Investors continue backing companies in this space, though choices have become more selective across the market.

What Are Investors More Cautious?

Software funding rounds went down by -10.7% year on year in 2025. Other tech sectors recorded more hectic declines, including internet funding at -15.0% and apps at -20.8%.

These declines show how investor behaviour has changed across global markets. Vestd founder and CEO Ifty Nasir explains: “What we’re seeing is a clear shift in investor behaviour. Capital hasn’t disappeared, but it’s becoming far more selective.”

This selectiveness shows up most in early-stage funding activity. Seed funding went down by -19.6% globally, which makes it harder for new startups to secure early backing.

Nasir explains the reasoning behind this pattern. He says, “The data reflects that investors are primarily prioritising sustainable growth over early-stage expansion, which is resulting in a potential risk for the future pipeline of high-growth companies.”

Business survival rates influence how investors think about risk. Vestd reports that almost half of new businesses in the UK fail within three years, and more than 65% in the United States do not last beyond ten years.

Economic conditions also influence funding decisions across regions. Vestd notes that changing legislation and evolving market demands mean organisations must think carefully about how they finance growth.

Where Is The Money Going Instead?

Later-stage companies attract more funding activity in this environment. Post-IPO equity funding came up by 46.7% and post-IPO debt by 44% in 2025, according to Vestd’s findings.

Debt financing also increased by 21.4%, showing interest in structured funding routes that support growth without heavy dilution.

Secondary markets have gained ground across key regions with lobal secondary rounds coming up by 24%. India recorded a 77% increase, which is an indication that more companies are looking into alternative ways to access liquidity.

AI keeps attracting investor attention across global markets as the sector recorded 9,519 funding rounds in 2025, with a 1.7% increase from the previous year which makes it the only top sector to record growth.

Emerging unicorns give another view of where capital is going. Software recorded 271 emerging unicorns globally, with an 8.8% increase year on year, while artificial intelligence recorded a 41.7% surge in emerging unicorn activity.

Nasir says, “Capital is still out there – it’s just more selective. The founders who plan ahead and build properly structured businesses will be the ones who stand out.”