Venture capital funding for startups reached $91.5 billion in Q1 2025. Marking an 18.5% increase from the previous quarter and making it the second-largest quarterly total in the past decade, according to data from PitchBook.
Despite the surge in capital, investor sentiment remains cautious. Kyle Stanford, lead U.S. venture capital analyst at PitchBook, said he’s more bearish now than at any point in his 11-year career tracking the market.
The optimism that 2025 would spark a wave of IPOs and acquisitions—returning liquidity to investors and founders—has faded. Stock market volatility and fears of a recession, amplified by President Trump’s tariff policies, have made many startups reluctant to go public.
“Liquidity that everyone was hoping for doesn’t look like it’s going to happen with everything that’s gone on the past two weeks,” Stanford said
Some companies, including Klarna and Hinge, have already delayed or are considering delaying their IPOs due to market instability.
Stanford cautioned that the headline investment figure is misleading. Nearly half of the $91.5 billion came from OpenAI’s massive $40 billion raise. Another 27% was tied up in nine other mega-deals, including Anthropic’s $3.5 billion and Isomorphic Labs’ $600 million rounds.
“These deals are really masking the challenges many founders are going through,” he said. Many startups may soon have to face down rounds or accept acquisitions at steep discounts.
While some startups survived the post-ZIRP era by cutting costs and adjusting expectations, many remain financially fragile. A recession could devastate their revenue streams, leading to fire-sale acquisitions or outright shutdowns.
Startups and investors had pinned hopes on a market rebound in 2025—but instead, economic uncertainty may accelerate widespread closures.
