Late-Stage Funding Leads the Way in Startup Investment

In the first quarter of 2025, startup investment saw a major boost—but almost entirely at the late stage. Early and seed-stage startups struggled to attract funding as investors focused on large, established companies.

Total global venture capital reached $113 billion in Q1—the strongest quarter since mid-2022. However, a single massive deal skewed the numbers: OpenAI raised $40 billion, the largest private funding round ever. This alone accounted for more than a third of total global startup investment and pushed OpenAI’s valuation to $300 billion.

Without that deal, global startup investment would have remained flat compared to the same period last year—and even slightly down from the previous quarter.

Late-Stage Investment Grows, Early Funding Shrinks

Q1’s total of $113 billion was a 17% increase over Q4 2024 and a 54% jump year-over-year. But nearly all the growth came from late-stage deals, which climbed to $81 billion—up over 30% from the previous quarter and nearly 150% from last year.

Meanwhile, early-stage startup investment dropped to $24 billion, the lowest in five quarters. Seed funding also declined 14% year-over-year to $7.2 billion, and those numbers may still be incomplete as some deals are reported late.

AI Dominates Startup Investment in Q1

Artificial intelligence continues to attract the most funding. In Q1 alone, nearly $60 billion went into AI startups—two-thirds of which went to OpenAI. Overall, AI made up 53% of all global startup investment in the quarter, the highest share ever recorded.

North America Leads in Funding but Sees Fewer Deals

Driven by OpenAI and other large U.S.-based deals, North American startup investment hit $82 billion—its best quarter in three years. Nearly half of that came from the OpenAI raise.

North America’s share of global venture capital rose to 73%, up from 59% last year. However, while investment dollars rose, the number of deals dropped, indicating that money is flowing into bigger rounds for fewer companies.

Startup M&A Activity Sees a Rebound

Startup mergers and acquisitions saw a strong quarter, with $71 billion in global exit value. There were 550 M&A deals involving venture-backed startups—a 26% increase from Q1 2024, though slightly fewer than Q4’s total.

Notable acquisitions included:

• Google’s planned $32 billion acquisition of Wiz (cybersecurity)
• Ampere Computing acquired by SoftBank
• Modernizing Medicine bought by Clearlake Capital
• Moveworks acquired by ServiceNow
• Weights & Biases acquired by CoreWeave

AI startups were a major part of this trend, with 81 M&A deals in Q1—a 33% increase from both the previous quarter and the same time last year.

Asia’s Startup Investment Drops to 2014 Levels

Asia had its weakest quarter in over a decade, with just $13 billion in startup investment—a 40% year-over-year decline and 25% drop from Q4 2024.

Much of the decline came from China, where funding fell to $6.5 billion. Ongoing economic challenges and rising trade tensions with the U.S. have heavily impacted the region’s investment activity.

Europe Holds Steady, But Lags in AI Deals

Startup investment in Europe remained flat at $12.6 billion in Q1, unchanged from both the previous quarter and a year ago. Without large-scale AI deals like those in the U.S., Europe’s share of global funding dropped to 11%, down from 16% in 2024.

Latin America Slips Despite Strong Early-Stage Deals

Latin America saw just over $800 million in startup investment during Q1—a 35% drop from the previous quarter but still 17% higher than a year ago.

Early-stage funding drove much of the activity, with $435 million invested. Fintech led the way, attracting more than half of all early-stage funding in the region.

What’s Next for Startup Investment in 2025?

Looking ahead, the startup investment landscape remains uncertain. Market volatility has delayed several IPOs, and concerns over a potential recession may slow funding even further—especially for early-stage startups.

Rising U.S. tariffs and an intensifying trade war could also hit hardware startups and AI companies, which rely heavily on chips and global supply chains.

While interest in AI remains strong, major players that have already raised tens of billions will need to show real progress to justify continued large investments—especially as investors become more cautious in a turbulent market.