The State of VC in Q1 2025

The stock market and state of the economy have sent many into fear of what’s ahead, but rounding out the first quarter of the year, startup funding remained high—yet the numbers are a bit misleading.

In Q1, startups attracted $91.5 billion of venture capital funding. The funding exceeded last quarter’s numbers by 18.5%. Though the outlook seems positive based on the funding alone, many worry about how changes in tariffs and threats of a recession will impact the rest of the year. 

Of the $91.5 billion investment in startups, OpenAI’s fund accounted for $40 billion. Out of all funding rounds in the past quarter, nine companies received funding of $53.3 billion. These skewed numbers are causing many to question how prosperous the quarter was for venture capital investments, and if the momentum will continue for the rest of 2025. 

AI continues to remain hot on the market. In the last quarter, 57.9% of global VC dollars went to AI. In North America alone, 70.2% of capital went to AI and machine-learning startups. We’re likely not to see this change anytime soon.

While all these numbers combined look promising, deal volume has continued to fall according to Pitchbook. As we’ve seen so far in 2025, the majority of dollars are going towards larger raises and fewer companies. 

It’s hard to see what’s on the horizon for the year, but it’s likely a safe bet that we’ll see a mirrored Q1 – AI giants continuing to take the top dollars for their companies. While many economic factors will pose challenges to founders, it’s a time to put your head down and continue working. After all, major players like Microsoft, IBM, and Airbnb were all founded during recessions! 💥 .