AI Dominates Q1 2025 Venture Funding, Led by OpenAI's Massive $40 Billion Deal

Eye On AI: Massive OpenAI Deal Masks AI's Slow Quarter

This column is a look back at the week that was in AI. Read the previous one here. The big news in the world of venture and artificial intelligence obviously has been OpenAI's massive $40 billion investment led by SoftBank. That big-money deal has folks talking, but a deeper look at the funding numbers for AI in Q1 seem to show a slight pullback from investors, in both the private and public markets, as more questions arise concerning how much large enterprises will continue (or start in some cases) throwing at AI tools. As our first-quarter 2025 global venture funding report illustrates, AI funding was again at an all-time high -- just as it was in Q4 2024. After hitting nearly $44 billion in Q4, total venture funding to AI startups was almost $60 billion in the first quarter of this year. While that seems impressive -- and it is, to a certain extent -- it's hard to ignore the fact that two-thirds of that amount is directly related to one company and its massive raise led by SoftBank. If we put that to the side, AI startups in Q1 raised less than half of what was doled out in Q4 last year, getting about $19.6 billion, per Crunchbase data. The biggest deal -- aside from OpenAI's -- of the quarter saw Anthropic, a ChatGPT rival with its AI assistant Claude, raise a $3.5 billion funding round led by Lightspeed Venture Partners that valued it at $61.5 billion. There were many massive deals for AI startups in Q4, including Databricks' $10 billion round, OpenAI's long-awaited raise of $6.6 billion, and xAI's $6 billion in a funding round. In fact, there were 11 rounds of $500 million or more, while Q1 saw just five. If one takes that $19.6 billion total, it would be the lowest for a quarter since AI startups raised only $13.9 billion in Q1 2024. Deal flow for AI startups also dipped in Q1 of this year, with only 1,226 deals announced -- marking a roughly 25% drop from Q1 last year and more than 150 rounds fewer than Q4. But it's not just about the private market and venture capital. The poster-child for AI on the public market, Nvidia, had a bad quarter in the stock market in Q1, with shares dropping more than 20%, while semiconductor company AMD's shares shaved off nearly 15%. Shares of Oracle, a big player in the U.S.' new AI endeavor, The Stargate Project, dropped more than 15% for the quarter. The Nasdaq Composite Index -- a good general indicator of how tech stocks are faring -- was down about 10% for the quarter. Of course, the big news on the public market was CoreWeave's IPO, but the big event barely made any waves as the stock remained relatively flat after premiering (even after the offering significantly shrank in size). CoreWeave's IPO -- which had been looked at as a bellwether for the expected thawing of the IPO market -- may be the best illustration of investors starting to take a hard look at what's going on in a heated market. As the IPO approached, there seemed to be more questions and concerns being voiced about how quickly AI adoption will happen for many large companies and how much they are willing to allocate to data center spend. There is also worry that with so many data centers being built, supply could outstrip demand and lower prices. Of course, Q2 may be an entirely different story in both the private and public markets, and the OpenAI round did, in fact, happen, so that investment can't just be discounted. However, there is also a chance investors are starting to look more closely at AI and where the market for spend on the technology is actually going.

Global VC funding hits $113 billion in first quarter driven by outsized AI deals - SiliconANGLE

Global VC funding hits $113 billion in first quarter driven by outsized AI deals New reports out today from Crunchbase Inc. and PitchBook-NVCA Venture Monitor reveal that global venture capital rebounded sharply in the first quarter of 2025, posting its strongest performance since mid-2022. However, both datasets point to a growing division in the startup ecosystem where a small set of companies and sectors, particularly artificial intelligence, are capturing an outsized share of investment. According to Crunchbase, total global startup funding reached $113 billion in the first quarter, up 17% from the previous quarter and an impressive 54% year-over-year. Though the headline figure is positive, the number was slanted by one single deal: OpenAI's $40 billion round on a $300 billion valuation announced on March 31. The OpenAI deal represented more than half of U.S. venture capital funding and a third of the global total. AI funding as a whole hit $59.6 billion, or 53% of global VC activity in the first quarter. According to PitchBook, 77% of U.S. deal value went to AI, largely thanks to OpenAI. In the words of Kyle Stanford, director of U.S. Venture Research at PitchBook, the U.S. market "has become very bifurcated between a handful of companies able to raise an endless amount of money and the rest of the market that continues to struggle through a capital shortage." Even without the OpenAI round, AI still captured 48.5% of the total invested in the quarter and one-third of completed deals. The surge in AI funding also contributed to a dramatic uptick in late-stage deals, which reached $81 billion in the first quarter, according to Crunchbase. Late-stage deals were up 30% from the fourth quarter of 2024 and 147% year-over-year. Conversely, early-stage funding declined slightly to $24 billion, while seed-stage investments dropped 14% year-over-year, to $7.2 billion -- a sign that while capital is flowing freely to established players, newer startups are finding it harder to secure backing. The concentration of capital wasn't limited to AI. The Crunchbase report notes that healthcare and biotech were the second-largest sector, with $18 billion in funding, followed by financial services at $10.8 billion. Geographic disparities are also shown in both reports. The Crunchbase data showed that U.S.-based companies attracted $80 billion of global VC funding, roughly 71% of the total. Of that, the San Francisco Bay Area alone accounted for $55 billion, making up 69% of all U.S. deal flow and nearly half of global funding. By comparison, PitchBook reported that venture capital in the Asia-Pacific region remained subdued, with fewer deals but larger average check sizes, most notably Binance's $2 billion round in March. Exit activity in the quarter showed a similar concentration at the top as venture capital funding. Crunchbase reported that the first quarter was the strongest merger and acquisition quarter for startups since 2021, with $71 billion in exit value and 12 acquisitions exceeding $1 billion. Google LLC's pending $32 billion acquisition of cybersecurity firm Wiz Inc. could become the largest acquisition of a venture-backed private company in history if finalized. Though the headline figures lok strong, there are possibly dark clouds ahead given declining commitments to VC funds. PitchBook estimates that there was $10 billion in new U.S. VC commitments secured during the quarter, the lowest fundraising pace since 2016. PitchBook argues the lack of liquidity from exits is deterring limited partners from making new commitments, placing additional stress on emerging managers and smaller funds, particularly outside the U.S.

Venture Capital Has Never Been This Obsessed With AI, New Data Shows

U.S. venture capital is becoming increasingly focused on a select cohort of investment prospects, with artificial intelligence the industry's clear priority, data released today by the research firm PitchBook shows. The first quarter of 2025 saw $91.5 billion in U.S. venture capital activity spread out across an estimated 3,990 deals, PitchBook's new data indicates. That's a massive increase in allocated capital compared to Q1 of 2024 -- up by more than double from $42.4 billion -- despite a (very slightly) smaller number of deals, down from 3,995 year-over-year. Notably, a big chunk of the Q1 2025 money came through in a single massive outlier deal: the $40 billion, Softbank-led funding round that OpenAI just closed. It's a world of haves and have nots, says Kyle Stanford, PitchBook's director of American venture research.