The first quarter of 2025 saw the largest startup funding round in history, with a major acquisition and a surge in investments. This strong growth in startup funding reflects an improving venture capital environment, though much of the funding was concentrated in a few companies and industries.

Overall, Q1 2025 was the best quarter for venture investment since Q2 2022. However, the numbers were significantly boosted by one major deal: OpenAI raised a record-breaking $40 billion, pushing its valuation to $300 billion. This single deal accounted for over half of U.S. venture funding and a third of global funding for the quarter. As a result, total global startup funding reached $113 billion, according to Crunchbase data. More than half of this funding went to AI companies.

Startup funding in Q1 2025 was up 17% from $96 billion in Q4 2024 and up 54% from $73 billion in Q1 2024.

Key Highlights of Q1 Global Startup Funding

Record-Breaking Investment in OpenAI

OpenAI’s $40 billion funding round was the largest private funding round ever. This round alone made OpenAI the second-most valuable private company, behind only SpaceX. The company has now raised a total of $57.6 billion since its founding in 2015. This latest round represents more than two-thirds of OpenAI’s total funding to date.

While OpenAI raised the bulk of funds, its competitor Anthropic also raised $4.5 billion across two funding rounds, though this amount is much smaller in comparison. In addition to AI companies, other sectors saw billion-dollar funding rounds in Q1, including immersive reality company Infinite Reality, which raised $3 billion, and cryptocurrency company Binance, which raised $2 billion.

Strong Funding in the U.S.

U.S. companies attracted $80 billion in venture funding during Q1 2025, representing 71% of global funding. The San Francisco Bay Area accounted for $55 billion of that total, making up 69% of U.S. funding and 49% of global venture funding.

M&A Activity Reaches New Heights

Q1 2025 also saw the strongest merger and acquisition (M&A) activity for startups since 2021. The total value of reported exits reached $71 billion. Notable acquisitions included Google’s potential purchase of Wiz for $32 billion, pending regulatory approval. There were 12 acquisitions above $1 billion in Q1, including deals involving companies like Ampere, Modernizing Medicine, and Moveworks. However, the total number of deals was lower than the peak seen in 2021.

AI Sector Dominates Global Funding

The AI sector led global startup funding in Q1, with $59.6 billion invested—accounting for 53% of all global venture funding. This marks the largest amount ever invested in AI in a single quarter. Other sectors also saw strong investment, with healthcare and biotech companies receiving $18 billion and financial services companies attracting $10.8 billion.

Late-Stage Funding on the Rise

Late-stage funding saw significant growth in Q1, reaching $81 billion—up more than 30% from the previous quarter and up 147% from the same time last year. This growth highlights increasing investor confidence in more mature startups.

Early-Stage Funding Declines Slightly

Early-stage funding, however, saw a slight dip, with $24 billion invested in Q1 2025. While Series A and B rounds remained strong in sectors like healthcare and biotech, other industries such as robotics, AI, and cloud services also saw large early-stage investments.

Seed Funding Declines

Seed funding in Q1 2025 dropped to $7.2 billion, a 14% decrease from $8.4 billion a year ago. This decline is typical, as seed funding totals usually rise after the close of a quarter due to updated data.

Venture Capital Adapts to AI’s Growing Demands

The Q1 funding data shows how venture markets are adapting to the rise of AI, particularly in terms of the massive capital required for AI computation. A large portion of the capital invested last quarter went to OpenAI, highlighting the immense demand for AI innovation.

Valuations of companies have been rising rapidly, with the Crunchbase Unicorn Board adding $400 billion in value in Q1 2025. The board now exceeds $5.8 trillion in total value.

Slow IPO Market

The IPO market for tech companies was relatively slow in Q1. The most notable IPO was CoreWeave, a cloud service provider for AI infrastructure, which saw its stock price rise significantly after its initial public offering.