In Q1 2025, we again saw investment in late-stage startups surge, while venture capitalists spent less money on seed- and early-stage startups globally.
That continues a clear trend that has emerged from the Crunchbase dataset in recent quarters: Large, established startups are landing outsized deals and more money, while the youngest companies struggle with fewer investment dollars.
In all, global venture funding in Q1 clocked in at $113 billion — the strongest quarter since Q2 2022 — but a staggering one-third of the total was thanks to a single round: OpenAI’s $40 billion raise. The new funding, which marks the largest-ever investment in a private company, pinned a $300 billion valuation on OpenAI, making it the second most valuable private startup in the world, behind only SpaceX, which was founded 13 years earlier.
Without that raise, global venture investment would have been flat year over year and down quarter over quarter, Crunchbase data shows.
The raise also bolstered North America’s venture numbers significantly, while investment in Asia and Europe declined or plateaued.
Startup M&A bounced higher year over year in Q1 but stayed flat compared to Q4.
And AI funding, of course, continued its skyward trajectory in Q1, with multibillion-dollar funding deals not just to OpenAI but several of its rivals.
Let’s take a closer look, with 11 charts that underscore the major startup and VC trends in Q1 2025.
Late stage rises as early stage falls
Global venture funding in Q1 totaled $113 billion, a 17% gain quarter over quarter and up 54% year over year.
The increase was driven by late-stage investment, which gained more than 30% QoQ and 147% YoY to $81 billion.
Global early-stage investment, however, fell to $24 billion — the lowest level in at least five quarters, Crunchbase data shows.
Seed funding also fell 14% YoY to $7.2 billion. (Keep in mind, though, seed funding totals typically increase over time as many seed rounds are added to the Crunchbase dataset after the close of a quarter.)
Artificial inflation?
AI was the top sector for venture funding in Q1, with nearly $60 billion invested (of course, two-thirds of that was just for OpenAI).
All told, the quarter marked the strongest one for AI funding ever, with an astonishing 53% of Q1’s global funding going to the sector.
In North America, dollars climb while deals fall
Thanks to OpenAI and other large deals for U.S.-based companies, North America’s funding total soared to $82 billion — the highest quarterly funding level in three years.
The OpenAI deal alone counted for nearly half of the region’s quarterly total.
North America also upped its share of global VC dollars to nearly 73%, from 59% in 2024.
But as happened globally, late-stage investment grew while funding for seed- and early-stage startups fell.
And even as the total dollars invested in North America-based startups has climbed quarter over quarter for the past several quarters, deal volume has continued to fall — highlighting the extent to which those dollars are going into bigger deals for fewer companies.
M&A dealmaking makes comeback
Q1 was the strongest quarter for startup M&A dollar volume since 2021, totaling $71 billion in reported exit value globally, Crunchbase data shows.
There were 550 M&A deals involving venture-backed startups in the first quarter of 2025 — a 26% increase compared to Q1 last year, but slightly below the 563 deals done in Q4.
The most recent quarter included Google’s planned purchase of cybersecurity unicorn Wiz, a deal that, if finalized, will mark the largest acquisition for a private company ever with a price tag of $32 billion.
In total, there were 12 acquisitions above $1 billion for venture-backed startups in Q1. Beyond Wiz, the most notable include Ampere Computing’s acquisition by SoftBank, Modernizing Medicine’s purchase by Clearlake Capital Group, Moveworks’ acquisition by ServiceNow, and Weights & Biases’ purchase by CoreWeave.
Dealmaking for AI-related startups was particularly strong in Q1, Crunchbase data shows, with 81 such M&A deals — a nearly 33% increase from both Q1 and Q4 2024.
Asia sags to 2014 lows
Asia posted its weakest quarter for venture investment since 2014, with only $13 billion going to VC-backed startups in the region, Crunchbase data shows. That number represents a dramatic 40% drop from Q1 last year and a 25% decline from Q4 2024.
As in 2024, the decline was largely driven by China, which as the region’s largest venture market, significantly sways the numbers. VC investment for China-based startups almost halved YoY to $6.5 billion in Q1, Crunchbase data shows, no doubt due to both the country’s own economic troubles and rising trade tensions with the U.S.
Europe’s funding flattens
Europe’s venture funding plateaued at $12.6 billion in Q1 2025 — flat quarter over quarter and year over year, Crunchbase data shows.
Without the sort of outsized AI funding rounds seen in North America in the first quarter, the continent’s share of global funding also fell to 11%, down from 16% last year.
LatAm dips despite early-stage strength
Crunchbase data shows startup investors put just over $800 million into seed through growth-stage deals across Latin America in Q1 — about 17% higher than year-ago levels, but down 35% quarter over quarter.
LatAm’s relative robustness in the quarter was in large part thanks to early-stage investment, which saw $435 million in funding. More than half of that went to financial services or fintech startups.
Fintech stood out as the dominant theme for investment, with more than half of all early-stage funding going to companies tied to financial services, per Crunchbase data.
What’s ahead?
After a volatile first quarter, it’s difficult to predict what lies in store for the startup world for the rest of 2025.
Public-market turbulence has already stalled some much-anticipated IPOs, and fears of a recession could put a damper on venture investment — particularly for seed- and early-stage startups.
Further U.S. tariffs and an escalating trade war will pose challenges not only for hardware startups, but the entire tech ecosystem and AI sector, which rely heavily on chips and data centers.
And while interest in artificial intelligence doesn’t show signs of waning, AI giants with tens of billions of dollars already in their coffers will likely have to show significant growth to continue getting massive checks from investors, many of which have seen their own stock prices whipsaw in recent months.
All that’s to say: buckle up for a wild ride.
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Illustration: Dom Guzman
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