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.