Venture capital came out swinging in Q1 2025, with global funding hitting $120.9B—the highest quarterly total since mid-2022—according to CB Insights. Blockbuster raises like OpenAI’s $40B round and a surge in mega-deals drove the spike, even as overall deal volume dropped to a five-year low. The trend is clear: fewer deals, bigger bets, and AI at the center of it all.
In this blog, we break down the key Q1 trends shaping the VC landscape—and hear expert insight from GFR Fund’s General Partner Teppei Tsutsui on what may lie ahead.
Global VC funding surged to $120.9 billion in Q1 2025—up from $90.1B the previous quarter and the highest quarterly funding total in nearly three years. This 35% quarter-over-quarter jump was powered by headline-grabbing rounds like OpenAI’s $40B raise, which alone accounted for one-third of all capital deployed.
That said, deal count dropped again, falling to 5,846 deals, the lowest in at least five years. This divergence highlights the ongoing shift: VCs are consolidating capital into fewer, high-conviction bets.
If Q4 2024 was the season of AI, Q1 2025 was the coronation. 20% of all venture deals in Q1 went to AI companies—the highest on record. Just three years after ChatGPT’s debut, AI has become the undisputed centerpiece of startup investing.
Despite a small dip in early-stage AI deal share (from 75% in 2024 to 70% in Q1 2025), the number of $100M+ early-stage AI rounds hit a new high. Companies like Isomorphic Labs, Apptronik, and Lila Sciences raised massive rounds early in their lifecycles, signaling VC appetite to double down early on moonshot AI bets.
Median early-stage deal size reached a new record of $2.7M, up from $2.0M in 2024. This suggests a “fewer but stronger” strategy among investors, who are opting to place larger bets on startups that demonstrate standout potential early on.
Q1 saw 12 billion-dollar M&A exits, the most ever recorded in a single quarter. Google’s $33B acquisition of Wiz was the largest private VC-backed exit of all time. In total, the top 12 M&A exits delivered $56B in exit value, showcasing strong demand from corporates seeking strategic technologies and capabilities.
Google Cloud announced the agreement to acquire Wiz to provide businesses and governments with more protection choices. | © Google Cloud
Notably, this M&A surge marks a potential turning point for liquidity-starved late-stage companies and their investors.
Deals of $100M or more (aka “mega-rounds”) made up 70% of all funding in Q1—a massive concentration. Of the $120.9B deployed globally, $84.4B came from just 145 mega-rounds, reaffirming the power-law nature of venture capital in 2025.
The US accounted for 92 of those mega-deals, followed by Europe (23) and Asia (22).
VCs crowned 20 new unicorns this quarter, bringing the global count to 1,272. The US led with 13 new unicorns, including startups like Abridge, OLIPOP, and Peregrine. Notably, the AI sector fueled several of these debuts, reflecting the market’s infatuation with frontier tech.
Reflecting on the first quarter (Q1), the period began with a sense of optimism—driven by the start of a new year and a new presidential administration in the U.S. From the perspective of early-stage investors, expectations were high: a strong public market, a robust late-stage funding environment, increased exit opportunities via IPOs and M&A, and, as a result, greater investor appetite. This optimism was clearly reflected in the Q1 figures, particularly in the total capital deployed, which reached its highest level since Q2 2022.
However, market sentiment shifted abruptly in early April following the announcement of new tariffs and the administration’s stance on influencing Federal Reserve decisions. This has introduced significant macroeconomic uncertainty, and we now anticipate a slowdown in venture capital funding in Q2.
Given this backdrop, we strongly encourage founders who are currently fundraising to move quickly and close their rounds if there is a term sheet on the table. For those planning to begin their fundraising process, it may be prudent to reassess and consider delaying by a few months.
Conclusion
Q1 2025 delivered a paradoxical moment in venture capital: record-breaking funding volumes paired with the fewest deals in years. The dominance of AI, the surge in mega-rounds, and an unprecedented wave of billion-dollar exits signal that capital is flowing—but only to the most compelling, high-conviction bets. While optimism defined the start of the year, emerging macroeconomic headwinds have quickly shifted the outlook. For founders, timing is everything. With volatility on the horizon, those in the market would be wise to act swiftly, while those on the sidelines may find value in waiting for calmer conditions ahead.
Certain information contained herein has been obtained from published sources and/or prepared by third parties.
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