Venture Capital funding during Q1 remains challenging, according to data firm Pitchbook.
Initially, expectations were for a resurgence in risk capital during Q1, but tariffs, global strife, and the risk of renewed inflation have caused expectations for liquidity and dealmaking to dim.
According to the report, Q1 activity has experienced a “bifurcation” as larger deals and exits have accounted for a greater percentage of total activity.
The ten largest transactions, each topping $500 million, accounted for 61.2% of the total VC investment during the quarter.
OpenAI and its $40 billion deal is a standout example as artificial intelligence remains hot. The other 9 deals accounted for 27% of total deal volume.
The report estimates that there were 3,990 deals in Q1 2025, a 10.9% increase from the prior quarter and about the same level as Q1 2024.
The overall deal value stood at $91.5 billion, an increase of 18.5% from Q4 2024. The few outlier AI deals buttressed this number.
Exits were higher, generating $56.2 billion – the best seen since Q4 2021 but almost 40% of this value was generated by a single IPO.
Investors are said to be “highly selective” in the volatile environment.
“Peak policy fog” means more months of uncertainty and a delay in venture “green shoots.”
USA
Kyle Stanford, Director of US Venture Research, says beyond the several home runs the rest of the US market is struggling for capital. In the US, 71% of deal value went to AI investments which were dominated by the OpenAI round. AI still captured 48.5% of the total invested during the quarter on 1/3rd of completed deals.
Market liquidity continues to be subdued with just 12 public listings. As only $10 billion in new funding commitments were closed in Q1, 2025 is on pace to be the lowest fundraising environment since 206.
Asia-Pacific
Melanie Tng, Asia Pacific Private Capital Analyst, says venture capital activity in APAC has been subdued and is a continuation of caution due to market uncertainty.
The number of deals in the reiong declined but the amount invested increased as investors sought out more established firms. Biannce, which raised $2 billion was the largest deal in Asia.
Only 95 exits were reported in Q1 2025 which is said to be the lowest number since Q2 2019.
Information technology is the top sector by deal count with momentum in AI and digital infrastructure.
Government-led initiatives helped to boost the sector as China announced a state-guided VC fund to support advanced manufacturing and strategic technologies.
South Korea revealed a fund to support industries like batteries, semis and biotech.
Europe
VC activity in Europe shows signs of a more cautious environment when compared to Q1 in 2024. AI topped the list in deal value followed by life sciences and Fintech, says Navina Rajan, EMEA Senior Private Capital Analyst.
On another note, IPO activity is expected to pick up later in the year.
Latin America
Kyle Stanford, Director of US Venture Research, reports that venture funding was strong in Latam, topping $1.4 billion which is the strongest quarter since Q3 2022.
While the number of deals dipped, large deals generated better results. The report highlights banking app Ualá raising $376 milion
Two VC funds, were closed with new commitments in Latin America during Q1 and only 22 funds have closed since the beginning of 2024, with less than $600 million in total commitments. Without more funding, near term dealmaking is expected to weigh on the market.