Venture Pulse Q1 2025
The Venture Pulse report provides insights around trends, opportunities, and challenges in the U.S. venture capital market.
VC investment in the US increased between Q4鈥�24 and Q1鈥�25; however, deal volume declined for the fourth consecutive quarter as some VC investors remained measured in the face of new uncertainties related to the actions of the new US administration. Deal speed slowed somewhat as investors took a more cautious approach to deal-making 鈥� particularly in areas like manufacturing and retail.
AI space red-hot in the US
The AI space continued to account for many of the largest deals in the US during Q1鈥�25, including a $40 billion raise by OpenAI, a $3.5 billion raise by Anthropic and a $3 billion raise by augmented reality firm Infinite Reality. A diversity of other startups also attracted sizeable funding rounds in the AI space, including AI for mining exploration company KoBold Metals ($537 million), AI development platform Lambda ($480 million), and humanoid robotics company Apptronik ($403 million). The US government showed firm commitment to development and support of the AI landscape during Q1鈥�25 with the announcement of The Stargate Project 鈥� a $500 billion project aimed at building AI infrastructure 鈥� funded by investors including OpenAI, SoftBank, Oracle, and MGX.
Defense Tech sees big raises in US during Q1鈥�25
Defense Tech continued to move up the charts in the eyes of VC investors in the US during Q1鈥�25.The quarter saw a number of large funding rounds in the space, including a $600 million raise by autonomous marine vessel company Saronic Technologies, a $240 million raise by autonomous drone company Shield AI, and a $250 million raise by anti-drone tech firm Epirus. Relatedly, there has also been growing interest in spacetech 鈥� a very complementary area of investment to defense tech 鈥� as VC investors recognize the importance of securing assets in the stratosphere and beyond.
We headed into Q1鈥�25 with some cautious optimism around a renewed sense of business confidence, more investment and more exit activity. That optimism has now abated in the face of the uncertainty caused by various executive orders and the back and forth on tariffs and trade. With expectations for the recovery of the IPO market moving farther out again, we could see a shift in VC firms needing to reallocate investment priorities as some companies may need additional funding prior to a now more distant IPO.
Conor Moore
Global Head, 乐鱼（Leyu）体育官网 Private Enterprise
Venture debt continuing to give startups opportunities to delay funding rounds
Venture debt continued to expand its role in the VC ecosystem in Q1鈥�25, particularly given that as overall exit markets have contracted, VC firms have become more selective with equity. This, paired with the expansion of private credit in general 鈥� venture and otherwise 鈥� has provided some startups the opportunity to push back new funding rounds given the economic and geopolitical uncertainties affecting the market. While the cost of venture debt can be high, it can be particularly attractive for startups that are at or close to profitability and believe they have the economics to handle the debt load and interest.
Fintechs positioning for exit 鈥� the question is when?
The US is home to numerous fintechs that are at the front of the line from a maturity perspective, which has made them good candidates to lead an IPO charge. During the quarter, Sweden-based Klarna made big moves towards a US-based listing, including forging a partnership with US-based OnePay to offer buy now, pay later offerings to Walmart customers1 and filing its intent to IPO on the NYSE with the SEC.2 However, following tariff announcements that sparked market volatility, Klarna put its IPO on pause, opting to wait for a more stable environment.
Alternative energy stays on the radar of US VC investors
Despite shifting government priorities, alternative energy solutions remained quite high on the radar of VC investors in the US during Q1鈥�25, in addition to technologies focused on providing more efficient energy production or more efficient energy consumption. During the quarter, advanced nuclear energy developer X Energy raised close to$700 million, while nuclear fusion-focused Helion raised $425 million. Growing recognition of the need to meet rapidly rising energy demands will likely continue to spur investment in the alternative energy space heading into Q2鈥�25.
Secondaries market continues to play positive role in providing liquidity
Given the extended drought in the IPO market, secondaries have continued to fill a void in the US in terms of providing liquidity to employees and early investors. The perception of secondaries has shifted significantly over the last 18 months; historically secondaries have been heavily discounted, while more recent secondary transactions have seen discounts narrow. This may reflect a number of trends, including companies choosing to stay private and using secondaries to provide employee and investor liquidity opportunities.
Trends to watch for in Q4鈥�24
Heading into Q2鈥�25, geopolitical tensions and economic concerns could keep some VC investors holding back given the amount of uncertainty in the market, in part because of the potential need to provide additional financing to existing portfolio companies as they navigate uncertain economic, supply chain and exit conditions. Investment in AI will likely continue to be the brightest light in the US, with investments expanding to include a broad variety of solutions from small language models, robotics, and agentic AI to AI-driven solutions for industries such as defense tech, health and biotech, and others.
M&A activity will be a key area to watch, as some companies may pursue strategic exits through acquisitions in response to ongoing market uncertainty. Attention will also remain fixed on the stock markets and whether volatility subsides enough to restore confidence in the IPO pipeline.
Footnotes
1Klarna Announces Partnership with OnePay to Exclusively Power Installment Loans at Walmart in the U.S. | Klarna International聽
2Klarna files registration statement for proposed Initial Public Offering | Klarna International
AI is going to drive a lot of diverse investment in the coming quarters. Large language models we have seen, but also small language models focused more on depth and relevance. Then there鈥檚 AI infrastructure 鈥� chips and other hardware, even the electricity needed to power AI. Plus, there鈥檚 the developments aimed at taking AI to the next level; right now, all the talk is about agentic thinking 鈥攕o taking that and looking at how to translate it into the real world, into robotics, into manufacturing.
Francois Chadwick
Partner, 乐鱼（Leyu）体育官网 Private Enterprise
Key insights from Venture Pulse Q1 2025
In the US in Q1鈥�25
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Venture Pulse Q1 2025
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