Rising Power Consumption Meets Sluggish Investment

Power consumption is climbing quickly worldwide. According to the International Energy Agency, global electricity demand grew by 2.2% last year—more than 40% above the average increase over the past decade.

This upward trend isn’t slowing down. The expansion of energy-intensive AI platforms, increased demand in developing economies, and higher usage of air conditioning during extreme heat are all pushing power consumption even higher.

But despite growing demand, investment in energy startups is moving in the opposite direction.

Energy Startup Funding Hits a Low

In 2024, global funding for energy startups fell to its lowest point in four years. And the first quarter of 2025 continued that trend, marking the weakest quarter for energy startup investment in over a year.

Still, there’s been a small uptick in April, offering a glimmer of hope.

A Few Notable Deals Spark Interest

Recent weeks have brought a handful of large funding rounds in the energy sector:

• Mainspring Energy, based in Silicon Valley, raised $258 million in Series F funding. The company builds onsite power systems for businesses, utilities, and data centers.
• Silicon Ranch, a solar energy provider from Nashville, secured $500 million from AIP Management. The company focuses on large-scale solar projects across the Southeastern U.S.
• Base Power, an Austin startup offering battery backup systems for homes, raised $200 million in Series B funding. Investors included Addition, Andreessen Horowitz, Lightspeed Venture Partners, and Valor Equity Partners.

The AI Factor: Powering New Opportunities

While funding for traditional energy startups remains low, companies tied to energy efficiency and infrastructure are attracting serious capital.

A standout example is The Stargate Project, a joint venture involving OpenAI, SoftBank, Oracle, and MGX. The group plans to invest $500 billion in U.S.-based AI infrastructure over the next four years.

This includes a proposed $100 billion allocation toward building multigigawatt infrastructure to support AI’s massive power consumption needs.

What’s Next for Energy Startups?

Given the current low levels of funding and the rising pressure from growing power consumption, there’s clear potential for a rebound in energy startup investment.

As demand increases and new technologies emerge—especially in areas like fusion and energy storage—investors may soon return to the sector in a big way.

It may only take a few major rounds to reignite momentum.

Pre-Seed Funding: A Launchpad, Not a Finish Line
Securing pre-seed funding is a major step for any startup, but it’s only the beginning. What happens next determines whether your business can grow and attract future investment.

At Yellow Rocks’ P2S program, we’ve seen how mismanaged pre-seed funding can stall progress. Here’s how to use it wisely and set your startup up for success.

Focus on Market Fit and MVP

Pre-seed funding should be used to understand your market and develop a basic product. Founders must test their ideas, gather feedback, and build a minimum viable product (MVP) that addresses a real problem.

This early phase is your window to validate what customers want and how to deliver it. Engage with potential users, test messages, and start refining a business model that can scale.

Prioritize Sales Early

Generating revenue is one of the strongest signals that your startup is viable. Use your pre-seed funding to prove that people are willing to pay for your product—even if it’s just the MVP.

Simple, low-cost tools like surveys and interviews can help you test assumptions and gather insights before investing heavily in marketing or development.

Build a Lean, Functional Product

Your product doesn’t need to be perfect—it needs to work. Keep development focused on solving the core problem. Avoid overspending on features that won’t directly help you attract or retain users.

Lean development based on real feedback keeps costs low and momentum high. Avoid burning cash on over-engineered solutions or long R&D cycles.

Plan for Multiple Outcomes

Scenario planning helps manage risk. Use your pre-seed funding to build flexible strategies for best-case, worst-case, and in-between outcomes. Each plan should outline practical steps for adapting quickly to changes in the market or product performance.

Avoid Common Financial Mistakes

Founders often waste pre-seed funding in ways that limit growth. Here are a few costly missteps to avoid:

• Overhiring: Avoid hiring expensive employees too early. Use freelancers or consultants to keep costs flexible.

• High Founder Salaries: Keep your own salary modest. Investors expect founders to prioritize the business, not personal income.

• Costly Relocations: Don’t rush into renting office space. Remote work or coworking spaces are smarter at this stage.

• Premature Branding Spend: Focus on finding your market fit before investing in high-end branding. Keep your name simple, relevant, and domain-available.

Watch Out for Cash Traps

First-time founders are especially prone to these pitfalls:

• Broken Cap Tables: Giving away too much equity early (e.g., in the friends and family round) can turn off future investors.

• Lack of Personal Investment: If founders haven’t invested their own money or resources, it can raise red flags about commitment.

• Ignoring Burn Rate: Track expenses closely to avoid running out of money before reaching key milestones.

Lay the Groundwork for Seed Funding

Even during the pre-seed funding phase, it’s important to prepare for what’s next:

• Build relationships with future investors

• Update your pitch deck with real traction and clear metrics

• Document your progress, milestones, and user growth

A clear plan for scaling will make your next round of funding easier to secure.

Exaforce Secures Major Investment to Enhance Security With AI
San Jose-based cybersecurity startup Exaforce has raised $75 million in Series A funding. The round was led by Khosla Ventures, Mayfield Fund, and Thomvest Ventures.

The company is focused on transforming how security operations centers (SOCs) operate by using AI agents to automate routine tasks. These intelligent agents aim to reduce manual work, improve response times, and help teams focus on high-priority threats.

“We’re building a platform where security teams can work side-by-side with AI agents,” said Exaforce CEO and co-founder Ankur Singla. “By combining human oversight with smart automation, we’re cutting down on false alerts and freeing up time for real security work.”

Why AI Matters in Cybersecurity
AI is becoming a key tool in cybersecurity, especially in enterprise environments. Agent-based AI solutions like the ones Exaforce is developing can make teams more efficient and reduce the time needed to detect and resolve threats.

“Automation is quickly becoming essential for modern SOCs,” said Umesh Padval, managing director at Thomvest Ventures. “AI can boost the productivity of security professionals and streamline how teams respond to critical issues.”

Cybersecurity Funding on the Rise
The funding boost for Exaforce comes amid growing investment in cybersecurity startups. In the first quarter of 2025, funding for venture-backed cyber companies hit $2.7 billion—up 29% from the previous quarter.

With its new funding, Exaforce plans to accelerate development of its AI-powered platform and expand its reach across enterprise security teams.

Artificial intelligence is no longer a buzzword—it’s changing how capital investment firms operate. Over the past year, nearly every startup we’ve reviewed at Navigate Ventures has included AI in some form. Like the rise of the internet, AI marks a major shift in the venture capital landscape.

As investors, we’re used to adapting. Now, AI is pushing us into a new era. It’s not replacing our judgment, but it’s becoming a critical tool in how we find and evaluate opportunities.

Here are three key ways AI is transforming capital investment today:

1. Smarter Deal Sourcing and Screening

AI tools are speeding up how capital investment firms review startups. Platforms like PitchBook AI and Visible can automatically analyze pitch decks, founder profiles, and business models. At Navigate Ventures, we receive over 1,000 pitch decks each year. Using AI helps us quickly sort through them, focusing on startups that fit our criteria—like strong product-market fit or a scalable team.

The result: better decisions, made faster.

2. Better Market and Competitive Insights

AI also helps investors understand markets in real time. It pulls data from funding rounds, hiring trends, acquisitions, and other signals. This gives capital investment firms a clearer picture of which markets are crowded and where real opportunities exist.

We can now identify underfunded areas, evaluate competitor positions, and spot smart co-investment opportunities. This improves our ability to manage risk and invest with confidence.

3. Faster Deal Structuring and Valuations

AI isn’t just for research—it’s also making deal execution more efficient. Tools like Tracxn and TechScout can help generate term sheets, model valuations, and draft legal documents. For capital investment firms, this means faster deal closings with fewer errors.

Speed is critical in competitive markets, and AI helps cut down on delays without sacrificing quality.

Human Judgment Still Matters in Capital Investment

AI is helping smaller and mid-sized capital investment firms compete with larger players. But success doesn’t come from the tools alone—it depends on how they’re used.

The best investors will blend AI with human judgment. Understanding a founder’s vision, assessing team chemistry, and making gut calls still require human insight. AI enhances this, but doesn’t replace it.

In the future, capital investment will be shaped by those who know how to balance data-driven tools with personal experience and intuition. AI may change how we invest—but people will always make the final call.

Eye on AI: Deal activity involving startups is climbing in 2025, with artificial intelligence leading much of the momentum. In the first quarter alone, 81 AI-related acquisitions were completed—a 33% jump from both Q1 and Q4 of 2024, which each saw 61 deals.

Several of these Q1 deals stood out for their size. ServiceNow acquired enterprise AI assistant platform Moveworks in a $2.85 billion cash and stock deal. Meanwhile, Nvidia-backed CoreWeave—now a public company—purchased developer platform Weights & Biases for $1.7 billion.

Another major acquisition came in February, when AI content firm Metaphysic bought Brahma, a technology company focused on entertainment applications, for $1.4 billion. That brought the number of billion-dollar AI deals in Q1 to three.

There are also rumors of more high-value deals on the horizon. OpenAI has reportedly explored acquiring the AI-powered personal device being developed by Sam Altman and former Apple designer Jony Ive. Given the people involved, any such deal would likely carry a significant price tag.

Eye on AI: Global Challenges Loom
These acquisitions happened before the recent escalation in trade tensions between the U.S. and China. With tariffs rising and supply chains under pressure, the AI sector could soon face new challenges—particularly around chip access and energy supply.

Still, for investors seeking profitable exits, the growing number of AI startup acquisitions is a promising sign.

More Eye on AI: $2B Raise for Safe Superintelligence
In other notable news, AI safety research firm Safe Superintelligence (SSI) has reportedly closed a $2 billion funding round, led by Greenoaks Capital, at a $32 billion valuation. While not officially announced, sources say the deal is nearly finalized.

This is SSI’s second massive raise in under a year. The company, co-founded by former OpenAI chief scientist Ilya Sutskever, raised $1 billion last September from top investors like Andreessen Horowitz and Sequoia Capital. That round valued the company at $5 billion—meaning its valuation has jumped over sixfold in just seven months.

Interestingly, SSI isn’t generating revenue and doesn’t plan to launch an AI product anytime soon. Yet investor enthusiasm remains sky-high.

That’s the current state of the market—and why all eyes are keeping an Eye on AI.

Infinite Reality, a leader in spatial computing and AI, has announced its acquisition of Touchcast in a $500 million cash and stock deal. This marks the company’s biggest purchase to date.

The deal continues Infinite Reality’s rapid expansion through strategic acquisitions. Over the past year, the company has added multiple businesses to its portfolio, including a $207 million deal in March for music platform Napster. Infinite Reality aims to evolve Napster into a more interactive, social music experience.

Last year, Infinite Reality also acquired Landvault, a company that builds immersive digital environments for brands, in a $450 million all-stock deal.

With the addition of Touchcast, Infinite Reality is betting big on Mentorverse—Touchcast’s AI-powered platform that creates virtual mentors capable of lifelike video conversations. The company sees strong potential for this technology to enhance its broader vision for immersive, interactive experiences.

Infinite Reality’s value has grown significantly alongside its deal-making strategy. Since July, its valuation has jumped from $5.1 billion to $15.5 billion.

Originally founded in Norwalk, Connecticut, Infinite Reality is now headquartered in South Florida. The company has also been successful in raising capital, securing $3 billion in January from a private investor. Unlike many tech firms, Infinite Reality often partners with individual investors and family offices instead of relying solely on traditional venture capital. Still, it raised $300 million last year from firms including Lerer Hippeau and Lux Capital.

With Touchcast now part of its portfolio, Infinite Reality continues to shape the future of AI and spatial computing through bold investments and an aggressive growth strategy.

Global M&A Startup Deals See Strong Start to 2025
Global M&A startup activity rose 26% in the first quarter of 2025 compared to the same period last year. A total of 550 mergers and acquisitions involving venture-backed startups were recorded, up from 435 in Q1 2024. However, the number was slightly below the 563 deals completed in the last quarter of 2024.

In the U.S., the trend was similar. There were 300 VC-backed startup deals in Q1, a 40% increase from the previous year, but nearly the same as the 295 deals from Q4 2024.

High-Profile Deals Dominate Headlines
Despite overall volume staying level with late 2024, the scale and visibility of certain deals stood out.

The biggest was Google parent Alphabet’s $32 billion planned acquisition of cloud security firm Wiz, making it the largest buyout of a private, venture-backed company to date. This followed a previous attempt last year to acquire Wiz for $23 billion.

Soon after, SoftBank announced it would acquire Ampere Computing, a chip design firm, in a $6.2 billion cash deal. These high-value transactions sparked hope for a broader wave of global M&A startup activity in 2025.

Market Conditions Slow Momentum
There was strong early optimism that a shift in the U.S. administration might lead to fewer regulatory barriers, fueling more M&A activity. However, ongoing concerns about trade tensions, economic instability, and recession risks have dampened those expectations.

Ryan Lund, co-head of U.S. technology and global software at Houlihan Lokey, said the market feels more like 2018–2019, with only modest growth expected. “Deals are still happening,” he noted, “but they’re taking longer—often six to eight months instead of three to six.”

VCs Face Exit Pressure, But M&A May Not Deliver Yet
For venture capital firms, returning capital to investors remains a priority. Still, the current global M&A startup environment isn’t making it easy.

Ofer Schreiber, senior partner at YL Ventures, said larger, publicly traded companies are cautious due to market instability and shifting valuations. This hesitancy has slowed down acquisition activity, especially at the high end of the market.

Looking Ahead: Waiting for Stability
Despite early strong signals, most investors agree that the market needs more stability before M&A deal flow can accelerate.

“I’m hopeful we’ll see an increase in M&A and IPO activity,” said Umesh Padval, managing director at Thomvest Ventures. “But it will likely take a more stable market to see real growth.”

The outlook for global M&A startup activity remains cautiously optimistic — with patience being the common strategy as companies wait for better conditions.

The Next Phase of AI Is Built on Strong Foundations
The next phase of AI adoption is here, and it’s being powered by a new class of tools called AI enablers. These are essential software infrastructure components that help developers create scalable, efficient, and dependable AI applications.

Recent advances from companies like Google and DeepMind show how quickly AI capabilities are evolving. Training models is now faster, more cost-effective, and far more powerful. But to move from impressive demos to real-world enterprise adoption, the focus must shift to tools that support long-term development and reliability.

Learning from the Internet Revolution
Much like the early days of the internet, when companies had to invest in basic infrastructure, today’s AI growth depends on building strong technical foundations. Back then, companies like Cisco and Oracle became essential by providing the backbone for internet services.

Now, we’re seeing the same pattern emerge with AI. While many “point solutions” are available today, the next phase of AI requires deeper investment in systems that make AI easier to build, deploy, and manage.

Three Key Areas Driving the Next Phase of AI

1. Reliable Cloud Workflows for Enterprise-Grade AI

As AI tools move into large businesses and public institutions, consistency and reliability are non-negotiable. AI applications must produce repeatable results, manage errors smoothly, and scale without breaking.

To meet these needs, developers are turning to advanced workflow patterns that provide strong guarantees. These help ensure systems stay stable, letting engineers focus on innovation instead of fixing breakdowns.

2. Efficient Resource Management Tools

Even as AI becomes more affordable, companies must still watch how they use infrastructure. Poorly integrated tools waste time, money, and computing power.

AI enablers like smart resource management systems make it easier to handle databases, storage, streaming, and caching. They allow engineers to build more efficient workflows that are better suited to the demands of AI-native applications.

3. Better DevOps for Faster AI Development

DevOps has always been key to fast, high-quality software delivery. Now, it’s just as important in AI.

New tools for automated testing, remote builds, and AI-specific development environments are speeding up the creation of production-ready systems. Platforms like CoPilot and Cursor are just the beginning. With the right DevOps setup, developers can move from ideas to working AI systems much faster.

Enabling the Future of AI
The next phase of AI isn’t just about smarter models — it’s about building the right systems to support them. As demand for AI grows, so will the need for foundational tools that enable reliable performance at scale.

Enterprises that invest in these enablers now will be better positioned to lead in the next wave of AI innovation.

IPO Delays Could Lead to Missed Opportunities
Delaying an IPO isn’t a decision companies make lightly. Going public takes years of preparation and significant financial investment—especially for large, high-revenue businesses.

But when markets become volatile, even companies with solid IPO plans may hit pause. In recent weeks, Klarna, StubHub, and others postponed their pre-IPO roadshows, mostly due to poor market conditions. One week saw the Dow Jones suffer its third-largest daily point loss ever, making it hard for any company to feel confident about launching an IPO.

How Market Conditions Impact IPO Plans
When IPOs are delayed, it’s often with the hope that conditions will soon improve. According to IPO expert Jay Ritter from the University of Florida, short-term delays might not be a problem. Companies can resume their roadshows once the market stabilizes.

However, longer delays tell a different story. Ritter notes that it’s rare for companies to delay an IPO for an extended period and still complete a successful public debut. The longer they wait, the less likely they are to follow through.

One exception is construction tech company Procore, which filed to go public in early 2020 and finally debuted on the NYSE more than a year later. On the flip side, WeWork is a cautionary tale—it postponed its IPO in 2019, went public via SPAC in 2021, and filed for bankruptcy in 2023.

Many Companies Are Holding Off on Public Filings
Instead of delaying public offerings after filing, many companies are now choosing to delay the filing process altogether.

Airbnb, for instance, held off on its 2020 IPO due to the pandemic but successfully went public in late 2021. Instacart filed confidentially in 2022 but waited over a year to make its filing public.

Other examples include AI chip maker Cerebras Systems, which paused its IPO after filing in September, partly due to security reviews. Digital bank Chime also filed confidentially in December but has yet to release a public prospectus. Navan, a business travel and expense firm, filed confidentially years ago and hasn’t resurfaced since.

Meanwhile, Figma recently made headlines with a new confidential IPO filing after its proposed sale to Adobe fell through.

From Delay to Withdrawal: A Difficult Choice
There comes a point when a company must choose between moving forward or backing out of an IPO. Withdrawing an offering is never taken lightly—and it can carry long-term consequences.

Jarrod Humphrey, a professor at Xavier University, explains that pulling out of an IPO can make it much harder to go public in the future. His research shows that between 1997 and 2021, about 1 in 6 IPOs on the Nasdaq and NYSE were withdrawn, resulting in billions in lost capital.

A recent high-profile example is Turo, the peer-to-peer car rental platform. It withdrew its IPO in February after a rough start to the year, including two high-profile incidents involving vehicles rented on its platform.

What’s Next for IPOs?
It’s unclear how many more companies will cancel or delay IPOs. Market conditions have shown some signs of improvement, especially in the tech sector. If the trend continues, we may see more companies move forward with their public listings.

Still, as delays stretch on, the chance of successful debuts continues to shrink. For companies considering IPOs, timing is everything—and the clock is ticking.

Cybersecurity Funding Sees Growth After Recent Lows
After several slow quarters, cybersecurity funding saw an uptick in the first quarter of 2025. Venture capital investments in the sector totaled over $2.7 billion, marking a 29% increase from the previous quarter. While this figure is slightly below the $2.8 billion raised in Q1 2024, it signals renewed investor interest in the space.

Deal Volume Declines, but Investor Interest Holds Strong
Despite the increase in total funding, the number of deals dropped sharply. Only 139 deals closed in Q1 2025 — a 31% drop compared to the same period last year, and a decrease from over 150 deals in Q4 2024.

Massive Acquisition Fuels Optimism
One of the biggest drivers behind the surge in cybersecurity funding may be the record-setting acquisition of cloud security company Wiz. Google’s parent company, Alphabet, announced plans to buy Wiz for $32 billion, the largest acquisition of a venture-backed company to date.

This headline-making deal is likely to encourage more investors to explore the cybersecurity market. Experts believe the deal highlights what’s possible in the space and may influence how investors identify promising startups.

AI and Automation Driving Innovation in Cybersecurity
Umesh Padval, managing director at Thomvest Ventures, noted that AI — particularly agentic AI — is playing a key role in attracting new funding.

“AI can help cybersecurity teams work faster and smarter,” said Padval. “Automation is becoming a must-have in enterprise security, helping detect and resolve threats more efficiently.”

Padval also expects fewer startups overall, but more disruptive platforms and bigger players gaining market share as established firms expand their cybersecurity tools.

Major Rounds Signal Confidence in Sector
Several standout funding rounds show strong confidence in high-growth companies:

• NinjaOne, a platform for endpoint security and monitoring, raised $500 million in a Series C extension, bringing its valuation to $5 billion.
• Island, a company building secure enterprise browsers, secured $250 million in a Series E round at a $4.8 billion valuation.
• Aura, focused on family cybersecurity, raised $140 million in equity and debt at a $1.6 billion valuation.

These large rounds reflect a growing appetite among investors for established cybersecurity companies with strong growth potential.

Early-Stage Deals Remain Competitive
Ofer Schreiber, senior partner at YL Ventures, pointed out that early-stage deals are still moving quickly, especially for startups showing early market success.

“Series A and B rounds are still competitive if the companies have traction,” Schreiber said. However, he added that many funds already have several cybersecurity investments, which could narrow options for new startups seeking capital.

Looking Ahead: Momentum vs. Market Uncertainty
While cybersecurity funding gained momentum in Q1, external challenges could test the sector’s resilience. Ongoing geopolitical tensions, concerns about a potential recession, and warnings from some VCs may affect funding in future quarters.

Still, the strength of recent investments and industry innovations suggest that cybersecurity funding remains a high priority for investors, even in uncertain times.

Global funding for the spacetech startup sector has remained strong, holding steady at over $6 billion annually for the past two years. Early data shows that 2025 is on pace to match those numbers. Startups working in satellite technology, reusable rockets, defense systems, and geospatial data continue to attract major funding.

While total investment hasn’t changed dramatically, the focus of investors is shifting.

What’s Driving the Change in Spacetech Investment?

Investor priorities are evolving due to several global and technological trends. According to a new report from venture firm Space Capital, these changes are influenced by:

• Geopolitical tension, including concerns about China’s growing space and missile programs.
• Global defense spending, such as Europe’s ReArm Europe plan, which could channel up to $870 billion toward military innovation.
• Market volatility, which is affecting how investors evaluate risk.
• New technology, especially in areas combining space and geospatial intelligence with emerging tech.

Despite these shifts, interest in spacetech startups remains high. “We’ve never seen stronger investor demand,” said Chad Anderson, managing partner at Space Capital.

Key Q1 2025 Spacetech Startup Deals

The first quarter of 2025 saw several large funding rounds for spacetech startups, signaling healthy investor appetite:

• Stoke Space (Kent, WA): Raised $260 million in a Series C round to continue developing reusable rockets. Total funding to date exceeds $436 million.
• Loft Orbital (San Francisco, CA): Secured $170 million in Series C funding to expand its satellite leasing services.
• K2 Space (Torrance, CA): Collected $110 million in Series B funding to scale its satellite manufacturing.

Although total deal count dipped slightly compared to previous quarters, the amount raised was in line with recent trends.

Growing Interest in Spacetech + AI

One emerging trend is the combination of spacetech and artificial intelligence. More spacetech startups are using AI to create real-time insights from satellite data or improve spatial analysis.

Recent examples include:

• Muon Space and the Earth Fire Alliance launched FireSat, a satellite constellation to monitor wildfire threats using AI. The first satellite went into orbit in March.
• Planet Labs partnered with Anthropic to use its Claude platform to analyze Earth imaging data.
• Niantic, after selling its gaming unit, launched the Niantic Spatial platform—blending geospatial AI with augmented reality experiences.

These developments highlight the growing overlap between spatial data and intelligent systems, driving a new wave of innovation.

Public Market Volatility Still a Risk

Despite ongoing investment, public market instability poses a challenge for spacetech startups looking toward future exits. After a surge in late 2024, stock prices for major space companies and defense contractors, including Lockheed Martin, have dropped in recent weeks.

Tariff reductions helped stabilize markets slightly, but volatility remains a concern. Still, many well-funded startups are in a strong position to ride out the uncertainty.

Outlook: Resilient Sector, Evolving Strategies

The spacetech sector continues to attract billions in funding. While investor strategies are adjusting to global trends and emerging technology, the demand for spacetech startups remains strong.

As markets shift and technologies evolve, successful startups will be those that adapt quickly—especially in areas combining space capabilities with next-generation tools like AI.

A Ripple Effect Across the Market

Economic uncertainty affects all types of investing, including deals backed by family offices and private equity firms. Venture capital–funded mergers and acquisitions are also slowing down. When markets face short-term risks, investors hesitate. Decisions are delayed until more information is available.

Right now, the market consensus is strong: tariffs are hurting the economy and disrupting a global supply chain that’s taken decades to build.

How Tariffs Affect Investment Activity

Tariffs act like a tax on U.S. businesses that import goods. These added costs pass through the supply chain, raising prices at each step until they reach consumers. This slows spending and reduces business efficiency.

Over time, these rising costs shift demand toward other markets, which can hurt U.S. exporters. Retaliatory tariffs from trade partners make the situation worse, reducing demand for American goods—from Kentucky bourbon to California wine.

As demand falls, companies reduce spending and hiring. Many delay or cancel large projects, particularly those involving new technology or long-term capital investment. This cautious approach drags down investment activity across the board.

Impact on Venture Capital and Growth Investment

Lower revenue forecasts and reduced cash flow projections lead investors to apply lower valuations. Startups and growth-stage companies respond by delaying fundraising or postponing plans to go public or get acquired.

When venture capital and private equity firms can’t sell or exit investments, they can’t return profits to their investors—like pension funds or wealthy individuals. Without that return, raising new capital becomes harder, and the entire cycle of investment activity slows down or stops temporarily.

Investors Look for Stability

Tariffs add a new layer of risk to an already uncertain market. As a result, many investors are shifting focus to domestic companies and minimizing their exposure to global supply chain issues. This trend mirrors the caution seen during the later stages of the COVID-19 pandemic, when M&A activity also slowed due to supply chain concerns and pricing uncertainty.

Depressed company valuations have made sellers more cautious, making deal-making even more difficult.

Outlook: Clarity Needed to Boost Investment Activity

Until the government provides clearer tariff policies, investors will likely continue to focus on U.S.-based opportunities. But even the pool of strong domestic options is shrinking.

The message from the market is clear: tariffs are damaging both the U.S. and global economy, and the uncertainty they bring is dragging down investment activity across all sectors.

Europe’s VC funding reached $12.6 billion in Q1 2025, showing no change compared to both the previous quarter and the same time last year. While global funding patterns shifted—especially with massive AI investments in North America—Europe’s share of worldwide venture capital dropped to 11%, down from 16% in 2024.

Funding across Europe has fluctuated since the downturn began in 2022. Over the past year, quarterly investments have ranged from just above $10 billion to over $16 billion. Despite recent flat growth, Europe still outperforms its pre-pandemic levels, with 2023 and 2024 both showing higher totals than before 2020.

Healthcare Drives Europe’s VC Funding

Healthcare and biotech led all sectors, raising $4 billion in Q1—32% of the region’s total. Financial services followed with $2.8 billion, and AI-focused startups secured $2.7 billion. These three sectors made up the majority of Europe’s VC funding activity this quarter.

Spain Joins the Billion-Dollar Club

The U.K. remained the top market for VC investment in Europe, with startups raising $4.4 billion. Germany followed with $1.6 billion, France brought in $1.3 billion, and Spain hit a notable milestone, crossing the $1 billion mark for the first time in over two years.

Late-Stage Funding Overview

Late-stage startups attracted $5.6 billion across more than 80 deals. Major rounds included:

• Isomorphic Labs (London): $600M – AI drug discovery
• Rapyd (London): $500M – Payments platform
• Amboss (Berlin): $259M – Medical knowledge platform
• TravelPerk (Barcelona): $200M – Business travel management

Early-Stage Activity Still Strong

Early-stage companies raised $5.4 billion across 280+ funding rounds. Key investments included:

• Verdiva Bio (London): $411M – Obesity drug development
• Windward Bio (Sweden): $200M – Respiratory treatments
• Neko Health (Stockholm): $260M – Health scanning tech

Seed Funding Shows Steady Momentum

Seed-stage investments totaled $1.6 billion across 850 deals. These numbers are expected to rise, as seed rounds often continue to be reported after quarter-end.

Europe’s VC Funding Holds Firm Amid Global Downturn

While North America’s venture activity grew—thanks to massive AI rounds like OpenAI’s $40 billion raise—Asia and Latin America saw a slowdown. Still, Europe’s VC funding remains higher than it was before the pandemic, especially in early-stage investing.

The U.S. stock market is going through another correction, stirring concern among investors. But for startups and venture capitalists, market volatility is nothing new. The past five years have seen constant ups and downs, and while it’s hard to predict a bear market, preparing for one is completely possible.

Venture capital funds currently hold $308 billion in dry powder—almost three times more than before the pandemic. That means funding is still out there. The key is knowing how to avoid common mistakes and make smart moves when things get rough.

Mistakes to Avoid During Market Volatility

Spending like it’s still a boom: In uncertain times, funding gets harder to secure. Founders must reduce costs early rather than risk running out of money. It’s a tough decision but necessary for survival.

Cutting the wrong things: Some startups try to extend their runway by removing core features, slowing growth, or letting go of critical talent. This can turn a promising startup into a stagnant “zombie” company that struggles to recover.

Ignoring the market shift: Founders often overlook how public market swings affect startup valuations. A dip in tech stocks can lower startup valuations, especially for later-stage companies. Some avoid raising flat rounds, hoping for better terms later, but this risks running out of capital altogether.

What Startups Should Do in Unstable Markets

Set one clear goal: Choose a critical milestone—like launching a key feature or landing a major client—and stick to it no matter what. This gives your team focus and keeps investors engaged.

Prioritize spending: Once your main goal is set, cut nonessential expenses. Focus your time and money on what moves the needle. That might mean delaying experimental projects and focusing only on what directly supports growth and survival.

Get investor feedback: Ask investors if your milestone is impressive enough to set your startup apart. If it stands out in good times, it’ll stand out even more when market volatility hits.

Build investor relationships early: Don’t wait until you’re desperate for funding. Start connecting with VCs ahead of time and research who has the capital to back you in a downturn. Prioritize investors with strong cash reserves.

How to Stay Top-of-Mind with Investors

In tough markets, investors focus on companies showing real progress. If you’re not yet growing rapidly, you can still stand out by showing that:

• You’re solving a big, important problem
• You offer something competitors don’t
• You’re making smart, fast decisions
• You keep investors updated and involved

Show that you’re realistic, committed, and ready to make hard calls when needed.

Market Volatility Can Be an Advantage

While downturns can wipe out weaker startups, they also give stronger ones room to grow. If you’re focused, lean, and prepared, market volatility can be your opportunity—not your downfall.

Startups that act early, adjust fast, and keep investors close will have the best shot at not only surviving but thriving in uncertain times.

Startups often focus heavily on product development and customer growth, aiming to achieve product-market fit as quickly as possible. But as competition grows and markets become crowded, even a great product may not be enough. That’s why making the shift from product fit to brand fit early in the journey is essential.

Branding isn’t just a logo or a catchy slogan. It’s the message a company sends to its customers, team, and investors. A strong brand communicates values, builds trust, and creates emotional connections. This can be a key factor in helping a startup stand out and grow.

Why Product Fit to Brand Fit Matters

While product fit means creating something people want, brand fit adds emotional depth and lasting value. According to McKinsey, brands that connect emotionally with customers gain 30% more new users and retain 60% more of them. Other studies show these customers have three times the lifetime value and are more likely to recommend the brand to others.

Brand fit also impacts broader business decisions. It shapes product development, hiring, and marketing strategies. A 2020 study from the London School of Economics found that companies with strong branding strategies outperformed the market by 20% over five years.

In addition, a trusted brand can lead to premium pricing. Bain & Co. found that companies with high brand equity can charge up to 20% more than their competitors.

Without branding, even innovative startups risk blending in with the competition.

The Branding Challenge for Founders

Most startup founders understand branding’s value, but it often gets pushed aside due to time and budget pressures. Many end up doing it themselves or running scattered campaigns that lack consistency.

Over time, this can hurt their business. A weak or unclear brand makes it harder to connect with customers, attract top talent, or build loyalty.

A Faster Way to Build a Brand

Startups need a branding approach that’s fast, effective, and cost-efficient. Hiring full teams or traditional agencies can take months and drain limited resources.

A better option is a branding sprint — a focused, short-term project led by experienced creative professionals. These sprints help startups quickly define their brand’s voice, message, and visual identity, without the overhead of long timelines or large teams.

By working with experts in a sprint-style format, startups can move from product fit to brand fit quickly and with impact. This approach combines speed and strategy, helping new companies create a strong identity without slowing down growth.

Brand Fit Is a Long-Term Advantage

For startups looking to scale, branding isn’t optional — it’s a smart investment. Shifting from product fit to brand fit early gives startups a clearer voice, stronger identity, and a better chance at standing out in a crowded market.

Building a brand doesn’t have to be slow or expensive. With the right approach, startups can create a lasting impression — fast.

Nuro has raised $106 million in fresh funding, bringing its current valuation to $6 billion. The investment is part of an ongoing Series E round.

This marks a decline from Nuro’s $8.6 billion valuation in 2021, when the company raised $600 million in a Series D led by Tiger Global Management.

Based in Mountain View, California, Nuro has faced significant changes since that last round. It has reduced its workforce and shifted strategy—from building autonomous delivery vehicles to now focusing on licensing its self-driving software.

The latest round includes returning investor Tiger Global, along with support from T. Rowe Price Associates, Fidelity Management & Research, Greylock Partners, and XN. Nuro also mentioned that new strategic investors will be revealed as part of an upcoming partnership.

“We’re excited to see strong investor enthusiasm for our Series E,” said Nuro co-founder and CEO Jiajun Zhu. “Our technology, experience with driverless Level 4 systems, and focus on software licensing make us a valuable partner for automakers and commercial fleets looking to scale autonomy.”

Founded in 2016, Nuro has raised a total of $2.2 billion to date.

Growing Interest in Autonomous Driving

Funding for autonomous driving technology climbed to $12.6 billion last year, more than doubling the $5.9 billion total from 2023. That growth was largely driven by Waymo’s $5.6 billion raise, led by Alphabet.

Startup funding in Latin America dropped sequentially in the first quarter of this year, mainly due to a decline in later-stage investments. Despite this, overall funding remained higher than the depressed levels seen a year ago, with early-stage investments showing signs of strength.

In total, investors put over $800 million into seed through growth-stage deals across Central and South America during Q1. This is about 17% higher than the same period last year, but a 35% decline from the previous quarter, which saw strong late-stage dealmaking.

For context, we’ve highlighted the total investment by stage for the last nine quarters below.

Early-Stage and Seed Investments

Early-stage investments were the standout in Q1, with around $435 million raised. Fintech companies dominated, with over half of the early-stage funding going to financial services firms.

A significant portion of the total came from a few large rounds, including:

• Plata, a Mexico City-based startup offering MasterCard credit cards, raised $160 million in a March Series A round led by Kora, reaching a $1.5 billion valuation.
• Buk, a Santiago-based HR software provider, secured $50 million in a January Series B round led by Headline.
• Paytrack, a Brazil-based business travel and expense management tool developer, raised $40 million in Series B funding from Riverwood Capital in January.
• Mendel, a Mexico City-based corporate expense management platform, raised $35 million in a March Series B round led by Base10 Partners.

While early-stage funding was strong, seed investments fell in Q1. However, we expect final numbers to be slightly higher, as seed rounds are often reported after they close. Some notable seed investments included:

• Niko Energy, a Mexico City-based solar provider, raised $8 million.
• Neofin, a Brazilian B2B payment tech startup, secured $6 million.

Late-Stage Investments

The pace of late-stage dealmaking slowed in Q1 after a strong Q4. Just $281 million was invested in Series C and later rounds, which is above last year’s figures but about a third of the amount raised in Q4.

Despite the slowdown, there were several notable late-stage deals:

• Ualá, a Buenos Aires-based digital banking startup, raised $66 million in a Series E round led by TelevisaUnivision.
• Alice, a São Paulo-based health plan provider for employers, raised $22 million in an extension round in February.
• Turbi, a Brazilian digital car rental platform, raised $12.5 million in a Series D round in February.

Muted Quarter and Slow Exits

The first quarter was relatively quiet in terms of startup exits, though some deals did take place.

On the M&A front:

• Gringo, a Brazil-based vehicle care app, was acquired by Cambridge Global Payments for $172 million.
• xFarm Technologies acquired Check Plant, a Brazilian agricultural software provider.
• Cencosud purchased Vopero, a Mexico-based fashion resale marketplace.

As for IPOs, the quarter was quiet, with no major offerings from Latin American venture-backed companies.

Looking Ahead

Although Q1 saw slower dealmaking, there’s plenty of potential for growth in the coming months. The decrease in activity this quarter leaves room for an uptick in both investments and exits as the year progresses.

In the world of product design, whether it’s aircraft landing gears, air filters, or smart-home devices, the hunt for the next big innovation is always on. But it’s manufacturing companies that turn these ideas into reality, improving production lines and processes to get products made efficiently and cost-effectively. This creates a prime opportunity for startups, entrepreneurs, and investors looking to shake up the manufacturing sector.

Do Your Research

While it’s exciting to jump into the latest consumer-driven trends, it’s essential to balance enthusiasm with long-term strategies for stability. The new wave of U.S. tariffs on key manufacturing components is forcing companies to rethink their sourcing strategies, production costs, and pricing models. For startups, these changes can be especially tough, as they often lack the purchasing power and supplier networks of established manufacturers.

Investors are adjusting their strategies too, now focusing on startups with strong supply chains and adaptable cost structures, rather than those relying on global dependencies that may be fragile.

Although government programs, like the MBDA’s Advanced Manufacturing Centers, offer some support, funding can be limited. So, how can startups and investors navigate these challenges while enabling innovation?

Create a Clear Plan for Success

To foster innovation, startups should start by setting a solid foundation. Building a profitable business involves financial planning, market analysis, and preparing for different scenarios. By understanding emerging technologies, using lean methods, and learning from industry veterans, startups can turn ideas into real products.

Given the financial constraints and scalability needs of startups, a modular approach to building facilities and adopting new technologies can be a smarter choice. This strategy reduces costs and minimizes the risk of failure, offering flexibility as the business grows. With infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS), manufacturers can scale projects gradually, only paying for what they need.

These solutions allow startups to use advanced technology, like predictive maintenance, through secure cloud systems, cutting down on heavy upfront costs. This approach helps startups get off the ground when budgets are tight. Plus, working with trusted technology partners can reduce costs and the need for specialized training.

Ensure Systems Work Together

The manufacturing sector is undergoing significant changes, and this will continue in the coming years. Many manufacturing companies already rely on complex systems that need to work seamlessly together. The adoption of integrated platforms is expected to rise from under 40% in 2023 to 70% by 2026, adding complexity and emphasizing the need for interoperability from the start.

One key to managing this complexity is using standardized data models. Many manufacturers already use a mix of systems, like ERP software, CAD tools, and sensors. Standardized data models allow these systems to communicate effectively, making it easier to handle large amounts of data and ensure smooth operation across different tools.

The good news for startups is that cloud ERP systems designed for manufacturing can help from day one. By structuring data according to common standards, manufacturers can more easily integrate information from multiple sources. This, in turn, helps startups make better use of advanced analytics to gain insights into operations, customer needs, and market trends — all of which enable innovation and help businesses stay ahead of competitors.

Stay Relevant and Keep Improving

Industry standards such as ISO, ANSI, and IEC should be on every manufacturer’s radar. Adhering to these standards ensures smooth interoperability and data sharing with partners and customers.

Building a manufacturing business is expensive and challenging, but breaking down large innovation efforts into smaller, manageable projects can make it easier and more cost-effective. By standardizing data and gradually integrating new systems, manufacturers can focus on specific areas of improvement without overwhelming their budgets or increasing risks.

By adopting this modular approach, startups create an environment for continuous, sustainable improvement, which ultimately reduces risk for investors and makes enabling innovation more achievable.

Ripple, a prominent player in crypto payments, is acquiring the brokerage firm Hidden Road for $1.25 billion in one of the largest mergers in the crypto sector. This acquisition marks a significant milestone for Ripple as it continues to grow and expand its reach in the financial industry.

The deal is the second major billion-dollar-plus transaction in the past month. The recent re-election of President Donald Trump has helped revitalize the crypto market, with many anticipating more relaxed regulations moving forward.

Just last month, the U.S. Securities and Exchange Commission (SEC) dropped a legal case against Ripple that had accused the company of conducting an illegal securities offering. This decision has created a more favorable environment for crypto businesses in the U.S.

Ripple’s CEO, Brad Garlinghouse, commented on the acquisition: “We are at a turning point for digital asset adoption. The U.S. market is now open in a way it hasn’t been before, thanks to the end of the regulatory uncertainty under the former SEC. The market is evolving to meet the needs of traditional finance.”

Hidden Road, which clears over $3 trillion annually across various markets, serves more than 300 top institutional clients, including hedge funds. This acquisition strengthens Ripple’s position in the financial sector and enhances its service offerings to institutional clients.

Crypto Industry Momentum

This deal continues a wave of momentum in the crypto space, despite some challenges posed by current global tariff issues. Recently, cryptocurrency exchange Kraken announced its $1.5 billion acquisition of NinjaTrader, a retail futures trading platform.

Additionally, stablecoin issuer Circle and trading platform eToro, which deals in stocks, crypto, and other assets, both recently filed for initial public offerings (IPOs). However, the current market volatility could impact these plans.

In Q1, venture funding for crypto and blockchain startups surged to $3.8 billion across 220 deals, a 138% increase compared to the previous quarter. However, the figures were heavily influenced by a $2 billion investment into Binance from Abu Dhabi-based investment firm MGX — the largest investment into a crypto company to date.

While OpenAI’s massive $40 billion funding boosted global and North American funding totals, Asia experienced a sharp downturn. The region saw its lowest funding quarter since 2014, with only $13 billion directed to VC-backed startups, marking a significant 40% drop from Q1 last year and a 25% decrease from Q4 2024.

This decline signals ongoing struggles for Asia’s venture market, which has seen drops in four of the last five quarters. Overall, the total investment figure is the lowest since Q4 2014, when Asia raised just $12.3 billion.

Late-Stage Struggles

Late-stage investment, particularly in technology growth, accounted for the largest declines, totaling just $6.1 billion across 145 deals. This represents a 29% drop from Q4 and a 27% decline from the same quarter last year. Deal volume also fell by 6% from Q4 and 25% from Q1 2024.

Notable late-stage deals in China included:

• Shenzhen Energy Environmental Protection, which raised $692 million in a venture round.
• Smart Fabric, a textile tech company, raised $460 million in a Series C round.
• Zhipu AI, a Chinese AI startup competing with OpenAI, raised $247 million in private equity.

While early-stage rounds saw a larger percentage decline in funding, late-stage rounds are often the largest contributors to overall funding totals, making this drop especially impactful.

Declining Interest in AI Startups

Despite global excitement around AI, funding for AI startups in Asia actually fell. These startups raised just $1.8 billion—14% of Asia’s total funding—half of what they raised a year ago and 23% less than in Q4. This highlights a slowdown in investment within the AI sector across the region.

Early-Stage and Seed Funding Slumps

Both early-stage and seed funding in Asia also saw notable declines. Early-stage rounds totaled only $5.3 billion in 533 deals, down 21% from Q4 and 53% from the same quarter last year. Deal flow also dropped 16% from Q4 and 19% from Q1 2024.

Seed and angel funding also dropped significantly, with only $1.6 billion raised in 791 deals, marking a 22% decrease from Q4 and 16% less than last year. The number of deals in this category fell by 19% from Q4 and a massive 48% from Q1 2024.

Country Breakdown

China’s funding share was a major contributor to the overall decline. The country’s startups raised just $6.5 billion, down from $12.5 billion in Q1 2024 and $8.2 billion in Q4 2024. This represents almost a halving of China’s share of Asia’s venture funding.

Only two of Asia’s top venture markets saw slight increases from last year. Israel’s funding ticked up to $1.1 billion from $800 million in Q1 2024, though it declined from Q4. Japan also saw an increase, raising $600 million compared to $500 million in Q1 last year, though it was down significantly from $1.3 billion in Q4.

The Impact of Geopolitical Tensions

Geopolitical tensions and ongoing conflicts are likely contributing factors to the region’s funding slump. The strained relationship between China and the U.S. has led to U.S. investors pulling back, particularly over concerns about security and AI. Additionally, China’s economy is still recovering from slow consumer spending, further hindering investor confidence.

Middle Eastern conflicts have also impacted Israel’s VC market, which has traditionally been a hotspot for investment.

A Potential Turnaround

Despite the downturn, there are signs that Asia’s funding market could rebound. Chinese AI startup DeepSeek, known for its cost-effective AI models, is reportedly seeking outside funding for the first time. The company’s innovative models have drawn interest from major investors like Alibaba, China Investment Corp., and the National Social Security Fund. If DeepSeek’s fundraising round is successful, it could signal a shift in Asia’s funding landscape for the next quarter.

Final Thoughts

Asia’s funding slump highlights the challenges startups face in a region affected by both economic and geopolitical factors. However, the potential for a turnaround remains, as demonstrated by companies like DeepSeek. For investors and startups, the key to success lies in navigating these uncertainties and preparing for shifts in the market.

Startups don’t fail because they lack good ideas. In most cases, they struggle because they run out of money.

One major reason for this is overspending on full-time hires. Many founders turn to Employer of Record (EOR) services under the assumption that adding full-time employees is the best way to build a team. Unfortunately, this approach can be a costly mistake and even fatal for many startups.

As I’ve mentioned before, to scale successfully, startups need to overcome three main challenges:

1. Efficiency – Completing tasks quickly and effectively.
2. Speed – Solving problems fast by hiring the right person without delay.
3. Cost Optimization – Keeping hiring costs low, especially during early stages.

EOR services fail on all three fronts. So why are so many founders still using them? Let’s break down why and explore better alternatives.

The Hidden Costs of EOR Services

Using an EOR can be slow. The process, which includes multiple checks, onboarding, and finalizing agreements, can take months. For startups, where market changes can happen in weeks, this delay can be disastrous. Why wait months to hire when you can onboard a contractor in just two days?

Beyond speed, EOR services limit control. When the hiring company doesn’t have a legal entity in the country, it has little influence over things like intellectual property rights, work scope, and employment terms. This creates risks, particularly in countries with employee-friendly labor laws.

In countries like Brazil and Spain, where courts often favor employees, firing an employee can result in lengthy and costly legal battles. This, combined with the monthly EOR fees (averaging $599), can add up quickly.

Better Alternatives to EOR

Luckily, EOR isn’t the only option for startups. Contractor management services or Contractor of Record (COR) solutions can address many of these issues.

Unlike EORs, these services offer speed, flexibility, and cost savings. Contractors can start working immediately, without the red tape tied to traditional full-time employment. And the cost difference is significant—contractor management services can cost as little as $39 to $70 per month, a fraction of the cost of EOR services.

When Do EOR Services Make Sense?

For startups hiring internationally, COR is usually the better choice unless a candidate insists on full-time employment with benefits, in which case, an EOR may be needed. EOR services may also be appropriate if you need to hire a specialist who will stay with the company for the long term, as this creates a full-time employee relationship.

In some cases, such as when operating in hard-to-pay regions or when a startup is committed to building a strong presence in a new country, both EOR and COR could offer valuable solutions.

Final Thoughts

Full-time hiring is not a must for every startup. Once founders realize this, they start exploring smarter, more cost-effective options. For seed and Series A companies, contractor management and COR services offer the flexibility, speed, and cost efficiency needed to scale without burning money on unnecessary overhead.

In today’s fast-moving market, this approach can greatly improve your chances of success and may even be the key to a startup’s survival.

Age assurance has quickly become one of the most discussed topics in trust and safety within digital platforms. Recent regulations—such as Florida’s ban on minors’ social media use and new rules in the UK and Australia—have further fueled the debate.

At Yubo, age assurance has been central to our platform since 2019. Two years ago, we became the first major social platform to age-verify 100% of our users, setting a new industry standard.

As our Gen Z audience has grown older, the benefits of age assurance have only increased. Today, over 70% of Yubo users are between 18 and 25, showing how age verification has helped us adapt to our users’ evolving needs.

Age assurance is not just about enhancing safety; it’s also a powerful tool for building trust among users. This trust, often a secondary benefit of safety measures, has proven to be a game-changer.

In a recent survey of over 10,000 users, 79% said they feel safer on Yubo compared to other platforms due to our verification system. More than 60% reported that age verification positively impacted their experience, and 53% expressed increased trust in interacting with real people.

Setting New Standards with Innovation

Yubo is leading the way in social discovery, allowing users to connect based on shared interests rather than likes or followers. From the start, we’ve understood that growth and safety must go hand in hand.

Our comprehensive trust and safety system blends advanced technology with human oversight. At the heart of this system is our age assurance protocol, which we fully implemented in 2022 through a partnership with Yoti, a leading digital ID provider.

The process is simple but effective: users enter their birthdate and take a “live selfie” in the app. Yoti’s facial age estimation technology compares this photo with the entered birthdate, delivering results in seconds. Around 87% of users verify successfully on their first attempt, with alternative methods available for those who need them.

The Competitive Advantage of Trust

For social startups competing with established platforms, safety innovation offers a clear edge. Age verification, in particular, delivers two key benefits: it minimizes risks while providing tangible value to users.

Since 2022, nearly half of Yubo’s active users have reported seeing fewer bots—a common problem on many platforms. By blocking ineligible or fraudulent accounts, verification reduces moderation costs and enhances the quality of user interactions.

Future-Proofing Your Platform

As the regulatory landscape around online safety becomes more complex, startups that invest in trust and safety from the start will have a significant advantage over those scrambling to implement solutions under pressure.

Our experience shows that age assurance encourages authentic engagement across all user groups. This has helped Yubo maintain a mature and loyal user base, with over 70% of users now between 18 and 25.

The Bottom Line for Startups

For startup founders, the message is clear: investing in age assurance is no longer optional—it’s a strategic necessity. Platforms that prioritize user safety through proactive innovation will build stronger communities, improve user experience, reduce risks, and stay ahead of regulatory changes.

If you’re considering this journey, here are some key points to keep in mind:

• Layer your approach: Combine automated systems with human oversight for maximum effectiveness.
• Stay ahead of regulations: Lead the way in safety standards through collaboration and best practices.
• Measure trust as a growth metric: Age assurance boosts brand loyalty and retention.
• Iterate continuously: Refine your systems regularly to stay ahead of new challenges.

For investors, trust and safety infrastructure should be a top consideration. Companies that excel in safety innovation demonstrate forward-thinking leadership and sustainable growth potential.

In a digital world where trust is essential, safety innovation is one of the smartest investments any social platform can make. The question isn’t whether you can afford to implement age assurance—it’s whether you can afford not to.

SaaS businesses have always relied on key metrics: LTV/CAC, CAC payback period, Net and Gross Revenue Retention, and others. These metrics are still important, but with the rise of AI—especially autonomous agents—integrating into marketing, support, and product workflows, the assumptions behind these metrics are shifting.

The New Possibilities with AI in SaaS

AI isn’t replacing the SaaS playbook; it’s transforming the way we think about it. With AI agents handling tasks like lead qualification, customer support, and product recommendations, many of the traditional benchmarks are being redefined.

For example, if AI agents reduce acquisition costs by automatically qualifying and converting leads, the CAC payback period could decrease. If these same agents improve retention through personalized onboarding and support, LTV could increase. A 3:1 LTV/CAC ratio might move toward 5:1. The Rule of 40, which works for traditional cost structures, could climb to 50 or even 60 for AI-enhanced teams.

These aren’t guarantees, but they’re possibilities SaaS founders and investors should start considering.

The Shift from AI Adoption to Business Impact

Many AI maturity models focus on readiness, skills, and infrastructure. But in SaaS, the real question is: “How is AI impacting business outcomes today?”

Here are five signs that AI is driving real change in your SaaS business:

1. Autonomy of Execution: Are AI agents running workflows in sales, support, onboarding, or analytics without much human input?
2. Deployment Across Teams: Is AI integrated across various teams, or is it confined to just one part of the organization?
3. Impact on Core Metrics: Are key metrics like CAC, LTV, churn, and expansion improving thanks to AI, and not by chance?
4. Faster Payback: Is the value from AI visible within months, not years, through gains in margin or productivity?
5. Ongoing Learning: Are your AI tools becoming smarter over time, adapting based on user feedback and data?

These are practical ways to assess whether AI is truly driving business value or just serving as an extra layer of technology.

The Role of AI in SaaS Fundamentals

The goal isn’t to abandon SaaS fundamentals, but to recognize that the way we achieve these metrics is evolving. AI is moving from a supportive tool to an autonomous teammate, reshaping the way we run businesses.

Getting Started with AI in SaaS

Operators and investors don’t need to rewrite the SaaS playbook, but they should be asking new questions. Are we using AI to enhance human creativity, market insights, and decision-making, while benefiting from the efficiency and scalability AI provides? Relying too heavily on AI could hurt a company more than not using it at all, as the human touch in SaaS still holds immense value.

The top-performing SaaS companies over the next five years will not only be product- or sales-led; they’ll be AI-leveraged, using AI to unlock new levels of growth and efficiency.

North America startup investment reached $82 billion in the first quarter of 2025, driven largely by continued interest in generative AI. This marked the highest quarterly funding level in three years. However, nearly half of the total came from one massive deal: OpenAI’s record-breaking $40 billion financing, led by SoftBank, announced on March 31.

Excluding this major late-stage investment, overall funding for other stages was down. Both early-stage and seed-stage investments saw declines, and the number of reported funding rounds fell across all stages.

Late-Stage Investment Leads the Way

The bulk of funding in Q1 went to late-stage and growth-stage companies, with $66.4 billion invested in these deals in U.S. and Canadian startups. This represents a significant increase from the previous year, more than quadrupling the amount raised in the same quarter last year. A large portion of this total came from OpenAI’s funding, but there were also other substantial investments. For instance, Anthropic, an OpenAI competitor, raised $3.5 billion in March and an additional $1 billion in January from Google.

Early-Stage Investment Faces Decline

While late-stage funding soared, early-stage investment in Q1 2025 dropped significantly, with $12.4 billion raised in Series A and Series B rounds. This was the lowest total in five quarters, both in terms of money invested and the number of rounds reported. Despite this overall decline, there were still some standout early-stage investments, such as Apptronik, which raised $403 million for its Series A, and Together AI, which secured $305 million in Series B funding.

Seed Investment Struggles

The seed-stage funding environment also showed weakness, with only $3.2 billion raised across 1,016 rounds. This was the lowest seed investment total in recent years. Lila Sciences, an AI-driven research platform, secured $200 million in seed funding in March, and StarTower, a blockchain infrastructure company, raised $50 million in February, making up a large portion of the total.

AI Investment Dominates

Given the focus on AI, it’s no surprise that artificial intelligence saw substantial funding in Q1. A total of $54 billion was invested in AI-related companies, making it the largest amount ever recorded for the sector in one quarter. This surge was largely fueled by major deals like OpenAI’s record funding, but also by investments in other AI startups.

Strong Exit Activity

Despite the decline in early- and seed-stage investments, Q1 2025 saw a strong exit environment. Notably, Google announced plans to acquire Wiz, a cybersecurity startup, for $32 billion, marking the largest M&A deal ever for a private, venture-backed company. Additionally, CoreWeave, an AI cloud infrastructure company, went public in an IPO that raised $1.5 billion.

M&A and IPO Trends

M&A activity was particularly strong, with at least 10 acquisitions of venture-backed U.S. companies valued at $1 billion or more in Q1 2025. This is the highest number in three years. In the IPO market, CoreWeave stood out with its $22 billion market debut, although overall IPO activity was quieter.

An Unusual Quarter

Q1 2025 was an unusual period in the startup investment landscape. While total funding rose due to the massive OpenAI deal, seed- and early-stage investments dropped, reflecting investor caution. Despite strong exit activity, the broader market outlook remains uncertain, especially with ongoing economic shifts.

Overall, North America startup investment in Q1 2025 tells a mixed story: significant growth in late-stage deals and AI, but declines in earlier-stage investments, highlighting shifting investor priorities and a cautious approach to risk.

SignalFire, a data-driven venture firm based in the Bay Area, has raised $1 billion for its fifth and largest fund. The firm plans to use these funds to invest in early-stage applied AI startups.

Founder Chris Farmer shared his thoughts on the firm’s progress over the past 12 years, noting that this fund is a strong validation of their success. “We’ve built a strong portfolio with companies we backed early on that are now scaling up,” he said.

With the addition of this new fund, SignalFire’s total assets under management now stand at $3 billion. The firm’s previous fund, launched in February 2023, was valued at $900 million.

SignalFire’s new investors include major U.S. public pension funds, an Asian sovereign wealth fund, a global bank, and a large insurer. The firm’s existing investors include endowments, foundations, family offices, and fund-of-funds.

Data-Driven Investment Strategy

SignalFire stands out for its machine-learning platform, Beacon AI, which powers much of the firm’s operations. “Beacon AI is the backbone of our firm,” said Farmer. The platform helps with sourcing deals, evaluating opportunities, supporting portfolio companies, and talent recruitment.

Beacon AI analyzes data from 80 million entities and 650 million people to detect growth signals, benchmark companies, and support overall portfolio success.

Investment Plans and Focus

SignalFire’s latest fund will be deployed over the next 2.5 years, with the firm planning to make approximately 100 pre-seed investments ranging from $100,000 to $1 million. The firm also plans to invest $1 million to $5 million in around 60 seed-stage companies.

For Series A and B rounds, SignalFire will commit between $5 million and $30 million, focusing on companies it has previously invested in at the seed stage. Additionally, the firm’s Executive In Residence (XIR) program will make investments between $15 million and $30 million in early-stage companies with a $2 million to $10 million run rate. The XIR program pairs seasoned executives with promising new companies in SignalFire’s portfolio.

Notable Investments

SignalFire’s applied AI investments include EvenUp, which provides legal tech for personal injury firms, Stampli, an accounts payable startup, and Horizon3.ai, a cybersecurity company specializing in penetration testing. Other investments include Grow Therapy, a platform for therapist scheduling, and Monarch Money, which focuses on household budgeting.

SignalFire has also backed Whop, a digital goods marketplace similar to Shopify.

One of the firm’s most successful exits was Frame.io, a video collaboration platform acquired by Adobe in 2021 for nearly $1.3 billion.

Texas startups are drawing increased investment this year, driven by growing interest in sectors like cybersecurity, defense tech, robotics, and even the de-extinction of mammoths.

In just the first three months of 2025, venture investors have poured nearly $2.9 billion into companies in Texas. This represents a significant milestone for the past year and is the largest quarterly total in more than two years.

Focus on Mega-Rounds

The increase in funding is largely due to a few major deals. About two-thirds of this year’s investment in Texas startups has gone to just five companies.

The biggest recipient was Saronic, an Austin-based company developing autonomous maritime vessels. In February, it secured $600 million in funding, bringing its valuation to $4 billion. The investment was led by Elad Gil and comes during a period of increased venture interest in defense tech.

In addition, two large security-related deals also contributed heavily to the total. NinjaOne, an Austin-based provider of automated endpoint management, raised $500 million in February at a $5 billion valuation. Meanwhile, Island, a Dallas company developing a secure enterprise browser, secured $250 million in late March.

Robotics and Mammoths Lead the Charge

Robotics is another sector seeing strong growth in Texas. Apptronik, an Austin-based startup developing humanoid robots for workplaces, raised an additional $53 million in its Series A round, bringing its total funding to more than $403 million.

Meanwhile, Colossal Biosciences, also based in Austin, is gaining attention for its work in gene editing to bring woolly mammoths and other extinct species back to life. In January, the company raised $200 million in a Series C funding round.

Fewer Deals, Larger Investments

Although the total funding to Texas startups is rising, the number of deals being made has decreased. This could be partly due to delays in reporting seed funding rounds, meaning the number of deals may increase over time. Regardless, it’s clear that investments are becoming larger, with fewer but more substantial deals being made.

If this trend continues through 2025, the number of funding rounds could reach a multi-year low. However, when investors commit to Texas startups, they are willing to make larger investments, which helps offset the drop in deal volume.

This week was reminiscent of the big-spending days of 2021, with several massive funding rounds announced. Leading the pack was OpenAI, which secured a historic $40 billion investment.

1. OpenAI – $40B, Artificial Intelligence
   The highlight of the week was OpenAI’s $40 billion investment, led by SoftBank. This deal is the largest venture investment ever made. SoftBank will contribute $10 billion to the deal and fund the remaining $30 billion, $10 billion of which will come through debt. The investment is contingent on OpenAI restructuring its for-profit subsidiary. If completed, this will push OpenAI’s post-money valuation to $300 billion.
2. Plaid – $575M, Fintech
   Plaid, the fintech company that connects user bank accounts to apps, raised $575 million at a $6.1 billion valuation. This funding, led by Franklin Templeton, will help Plaid manage employee tax withholding obligations and provide liquidity to employees via a tender offer. Plaid’s earlier planned $5.3 billion sale to Visa fell through in 2021 due to regulatory hurdles.
3. Silicon Ranch – $500M, Energy
   Silicon Ranch, based in Nashville, Tennessee, raised $500 million from European infrastructure investor AIP Management. The company, which focuses on solar and battery projects, is capitalizing on the growing U.S. electricity demands. Silicon Ranch has previously raised over $2 billion since its founding in 2011.
4. Runway – $308M, Artificial Intelligence
   Runway, an AI video startup based in New York, raised $308 million in a round that doubled its valuation from less than two years ago. The new round, led by General Atlantic, values the company at over $3 billion. Runway enables users to create videos with text or images and recently introduced its new Gen-4 AI model. The funding will help Runway expand its AI capabilities in film and animation.
5. AIRNA – $155M, Biotech
   AIRNA, a biotech company developing RNA editing therapies, secured $155 million in Series B funding, led by Forbion Capital Partners and Venrock Healthcare Capital Partners. The funds will support clinical trials for AIRNA’s drug candidate for alpha-1 antitrypsin deficiency and help develop its RNA editing therapeutics pipeline.
6. Atsena Therapeutics – $150M, Biotech
   Atsena Therapeutics, a gene therapy company focused on reversing blindness, raised $150 million in Series C funding. The investment, led by Bain Capital Life Sciences, will be used to advance treatments for genetic conditions like X-linked retinoschisis, which causes blindness. Atsena was founded in 2019 and has now raised nearly $238 million.
7. SandboxAQ – $150M, Quantum Computing
   SandboxAQ, a spin-off from Alphabet focusing on AI and quantum computing, raised an additional $150 million in its Series E funding. This round, supported by Google and Nvidia, follows a $300 million raise just four months ago. SandboxAQ is working on quantum-based products for sectors like telecom, financial services, and cybersecurity. The company has raised over $950 million since its inception.
8. Temporal Technologies – $146M, Software
   Seattle-based Temporal Technologies secured $146 million in Series C funding at a $1.7 billion valuation. The company helps businesses manage complex software applications and will use the funding to enhance its cloud products and invest in AI development. Temporal has raised $350 million since its founding in 2019.
9. RayThera – $110M, Biotech
   RayThera, a biotech company focused on immunology therapies, raised $110 million in Series A funding. The round was co-led by Foresite Capital and OrbiMed. This is RayThera’s first funding raise.
10. Neurona Therapeutics – $102M, Biotech
    Neurona Therapeutics, a clinical-stage biotech company working on regenerative cell therapies for neurological disorders, raised $102 million in financing. The company has now raised $426 million in total since its founding in 2008.

This week’s funding rounds highlight the continued strong investment in sectors like AI, biotech, and energy, with OpenAI leading the charge in artificial intelligence.

Venture funding to crypto and blockchain startups surged in the first quarter, more than doubling as the industry reacts to relaxed regulations. Overall, funding for Web3 startups reached $3.8 billion in 220 deals, according to data. This marks a 138% increase from the previous quarter, which saw $1.6 billion raised in 242 deals. It also represents nearly twice the amount raised in Q1 2024.

However, a closer look at the numbers reveals that the large increase is largely due to one major investment. Last month, Binance, a cryptocurrency exchange, secured $2 billion from Abu Dhabi-based investment firm MGX. This round is the largest-ever investment into a crypto company, surpassing the $1 billion raises for FTX and NYDIG in 2021.

Excluding this deal, Web3 startups raised $1.8 billion in Q1, similar to the previous two quarters of 2024 and lower than Q2 2024.

Key Deals in Web3
While deal flow continues to shrink, with fewer deals closed in Q1 than the same time last year, there were still significant investments. Phantom, a crypto wallet startup based in San Francisco, raised $150 million in a round led by Paradigm and Sequoia Capital, bringing its valuation to $3 billion. Additionally, Flowdesk, a Paris-based crypto-financial service company, raised $91.8 million for its trading infrastructure.

Market Challenges
Despite these strong investments, the market still faces challenges. Bitcoin dropped 9% in Q1, and Ether saw a more significant decline of 43%. The new White House administration has sparked optimism, particularly in crypto, with some expecting eased regulations. President Trump’s administration has already taken steps toward establishing a U.S. strategic Bitcoin reserve.

Despite these efforts, Binance’s large investment and its ties to the White House are causing some controversy. Binance, which pleaded guilty to violating anti-money laundering laws in 2023, might soon have connections with the White House. It was reported that President Trump’s family could take a financial stake in the company. Moreover, Trump-linked crypto bank World Liberty Financial is in talks with Binance to launch a dollar-pegged stablecoin.

Looking Ahead for Web3
The Web3 and crypto sectors may be moving forward despite market fluctuations. Some crypto firms are considering entering the IPO market. Circle, a stablecoin issuer, recently filed for an offering, while eToro, a trading platform for stocks and cryptocurrencies, filed for its IPO last month.

Investors will closely monitor these moves as the Web3 sector continues to evolve.

SandboxAQ, an AI and quantum computing startup spun off from Alphabet, has raised an additional $150 million in its Series E funding round. Investors in this round include major names like Google and Nvidia, along with others such as Ray Dalio, Horizon Kinetics, and BNP Paribas.

This new investment comes less than four months after SandboxAQ raised $300 million at a $5.6 billion valuation. With this latest boost, the company has now secured over $950 million in total funding.

SandboxAQ focuses on harnessing the combined potential of AI and quantum computing—reflected in its name, “AQ.” The company aims to develop commercial products across various sectors, including telecom, financial services, healthcare, and security. It is already working with several customers on enterprise software and cybersecurity solutions that leverage quantum computing.

The company was officially spun off from Alphabet in March 2022, following a successful $500 million financing round. At that time, former Google CEO Eric Schmidt was named chairman. SandboxAQ continues to attract significant investor interest, with backers including Breyer Capital, Eric Schmidt, Thomas Tull, T. Rowe Price Associates, and several others.

This investment marks the second major funding round for a Google spinoff this week. Earlier, Isomorphic Labs, another Alphabet spinoff, raised $600 million in its first external funding round. Isomorphic, which applies AI to drug development, was spun out of Google’s DeepMind division in 2021.

With these new investments, SandboxAQ is poised to continue advancing its AI and quantum computing solutions, driving innovation in critical industries.

When is the right time to change your company, role, or even your entire industry? The answer varies depending on who you ask. However, in venture capital, one thing is clear: the industry is experiencing a significant talent flux.

The Turning Point: 2023-2024
The venture capital industry faced a turning point in 2023, with the market slowdown putting immense pressure on both valuations and deal flow. The talent in the VC space was especially affected, as frustrations and career reflections grew. For some, this was a breaking point; for others, it was a wake-up call that set the stage for a massive shift in VC talent.

What drove this change? Several factors contributed to the rise in talent movement, including:

• The Desire for Independence: Many investors are natural entrepreneurs. For some, 2023 was the perfect moment to leave large firms and start their own ventures instead of competing in a crowded market.
• Frozen Deal Flow: A cautious investment environment left many VCs unable to deploy capital, causing career stagnation and frustration.
• Misalignment with Large Firms: Larger VC firms often have structures that can limit career growth for ambitious individuals. As the focus shifted from high-risk investments to asset management, many partners felt the need to explore new opportunities.
• Burnout and Toxic Environments: The pressure to succeed, combined with poor leadership and unhealthy work environments, pushed many professionals to reconsider their career paths.
• Shifting Roles: Some VCs began looking beyond traditional investing, seeking roles that allowed them to make a more tangible impact in operational positions.
• Fundraising Challenges: With fewer investors willing to commit capital, some VCs began rethinking their future within the industry.
• AI Disruption: The rapid rise of AI forced some investors to leave traditional firms in search of more forward-thinking opportunities that embraced AI.
• Generational Shifts: For veteran investors, 2023 marked a moment to reflect on their careers. Some decided to exit, recognizing that the venture landscape had changed.

Despite hopes for a market rebound in 2024, recovery has been slow. Yet, one undeniable shift is clear: VC talent is moving like never before. The movement that once simmered quietly is now reshaping the venture capital landscape.

Snapshot of Talent Movement
Career moves aren’t always predictable. Some shifts in the venture capital world have been building for months or years. Notable recent moves include Sam Blond of Founder’s Fund, who transitioned into an operational role, and Miles Grimshaw, who returned to Thrive from Benchmark. Additionally, Keith Rabois made his way back to Khosla Ventures.

The rise of new firms also continues:

• Michael Gilroy (formerly of Coatue) launched MarathonMP with Gokul Rajaram.
• Bilal Zuberi (formerly of Lux Capital) is working on a new fund.
• Anu Hariharan (formerly of Y Combinator) is paving her own path.

Some firms had to make difficult decisions due to challenges in fundraising. Greycroft cut five investors after failing to meet its fundraising target, while Octopus Ventures laid off 16% of its team. In Europe, Cavalry Ventures lost its third partner in 2024, and Judith Dada moved from General Catalyst to Visionaries Club in 2025.

Looking Ahead to 2025
Career-defining moves often occur during periods of intense pressure, such as the 2023-2024 downturn, or during times of market excitement, like the 2020-2021 boom. In between these cycles, many professionals tend to stay put. However, the market downturn led to an unprecedented reshuffling of venture talent, a trend that is still ongoing.

Looking toward 2025, the venture capital landscape is more optimistic than it was a year ago. This year presents a unique opportunity for professionals to reassess their goals, strengthen their networks, and embrace new possibilities.

The Opportunity for Emerging Talent
For junior and mid-level talent, the opportunity is even greater. As senior-level transitions continue to reshape firms, hiring is picking up again. Now is the time to make a bold move and secure a new role in the evolving venture space.