In conjunction with our Q3 2025 Venture Financing Report, we sat down with Mark Spoto of Razor’s Edge to get his take on the state of venture capital investing.
Key insights from Mark Spoto
On capital concentrating in fewer, later-stage ‘category winners’: The surge in invested capital in Series D rounds and beyond even as deal counts fell is clearly attributable to the growth in artificial intelligence-related companies. Investors are pouring large amounts into a small number of companies perceived to be category winners. A similar dynamic is playing out in the national security and dual-use technology marketplaces.
On the persistence of protective deal terms like pay to play: Pay-to-play provisions remain persistent as companies that raised at high valuations return to market without sufficient progress. In these new rounds of financing, the pay-to-play features are often used to enforce alignment among investors. This trend has not hit the national security and dual-use markets as pervasively, and it will likely be another 6 to 12 months before it will be felt.
On the ‘barbell’ investment pattern: There is significant interest at the earlier stage and growth/later stage in the defense and national security tech market. Series B rounds tend to be the hardest rounds to raise because companies need to show real progress against a business plan. This kind of progress can be tough to demonstrate, as it can be harder to prove in slow-moving government markets.