By Rohit Yadav, CAIA
Beneath the daily buzz and tactical chatter, meaningful shifts are quietly taking shape in venture markets. Lasting strategic change takes time. So, when I sat down to write this article (see the latest Q1 2025–Big Book of VC), I asked myself: what’s the one thing I truly wished had changed in Q1 2025 from a strategic asset class view? The answer: exits. Everything else is already in motion, slowly but steadily. Fundraising is reviving in the U.S. and Europe, while Asia is still lagging. AI remains the fundraising champion. Valuations are up, seed rounds ballooned, and big-name GPs still dominate LP capital, but that won’t flip in a single quarter.
Which brings us back to exits. After a tough 2023 and 2024, they’ve become the venture ecosystem’s Achilles’ heel. Many quietly pinned their hopes for clarity on the U.S. elections. For a moment, there was some momentum: the Wiz acquisition made waves, then Klarna paused its IPO after building hype. Just like that, the narrative flipped.
Today, exit optimism has faded. Markets are in constant reassessment mode, with a scarcity of bold moves. Some expect seed-stage capital to rise, being shielded from public market swings. Others foresee a deeper VC winter, with meaningful exits delayed until 2026. Still, I remain “positively hopeful” for 2025, especially on the M&A front and for the broader venture landscape, albeit tempered with caution. The road ahead may be bumpy, but perhaps that’s what makes this the moment for smart capital to lean in.
Here’s a look at the ten key highlights from Q1 2025—blended with some 2024 data, because in venture, data mostly lags the moment.
Startup Fundraising: Green Shoots but a Different Garden
The venture scene is warming up again, but it’s not business as usual. Investors are more intentional, and the landscape feels increasingly selective.
Key facts:
Global venture funding rose 17% quarter-over-quarter and 54% year-over-year in Q1 2025, building on the recovery in late 2024.
Late- and growth-stage funding in the U.S. surged in Q1 2025, reaching its highest level in over a year with a 43% increase from the previous quarter.
Looking forward: Tariff uncertainty and capital markets caution may spill into venture, complicating fundraising in Q2, especially at late stage.
Exit Woes: M&A Wakes Up, IPOs Hit Snooze
We’re still waiting for exits to play catch-up. M&A is picking up speed, but IPOs remain elusive. CoreWeave’s bumpy debut combined with Klarna and StubHub hitting pause amid uncertain conditions forces the ecosystem to wait for better signals.
Key facts:
IPO-ready startups hit a post-2018 high in both count and valuation, yet public listings remain sluggish.
Q1 2025 saw 12 $1+ billion acquisitionsQ1 2025 saw 11 $1+ billion acquisitions—with standout deals like Alphabet’s $32 billion purchase of Wiz marking a return to mega valuations.
Looking forward: Will Big Tech extend the buzz from Google’s Wiz deal? They have the capital. The question is: will they act? Expect more private exits than public ones in 2025, with “quiet M&A” deals happening without much fanfare. IPO activity will likely stay muted unless volatility eases and valuations stabilize.
AI at the Core
AI is where venture money is going. Early-stage AI companies are raising substantial rounds, often surpassing peers in other sectors.
Key facts:
Global AI startup fundraising surged past the $100 billion mark for the first time in 2024, as AI infrastructure players secured billion-dollar investments. Q1 2025 delivered one of the biggest starts ever for AI, with global funding reaching $60 billion.
In the U.S., AI and ML startups have taken center stage, accounting for a staggering 71% of total VC deal value.
Looking forward: AIl things AI!
The Peak Startup Cohort Faces the Music
Startups born amidst hype cycles are now hitting a wall. Progress is slower, funding is harder, and the Series A bar is much higher. It’s a tougher climb.
Key facts:
Just 36% of the 2021 cohort and only 20% of the 2022 group have reached Series A or beyond, compared to 51% to 61% for prior cohorts at the same stage in their lifecycle.
The number of months it takes for a U.S. startup to raise a Series A round, starting from its first Seed round of $1 million or above, has gradually increased over the last decade, from 18 months in 2015 to 28 months in 2024.
Looking forward: Expect more shakeouts among 2021–2022 vintage startups. Watch for M&A, with well-capitalized startups acquiring discounted or distressed peers. Also expect secondary market activity, as investors quietly offload underperformers to make room for stronger plays.
Global Shifts
The U.S. remains the epicenter of startup fundraising, but uncertainty stemming from tariffs and policies may give other geographies an opportunity to catch up.
Key facts:
The U.S. remains dominantU.S. remains dominant, accounting for over half of global deal value and raising 6.3x more capital than Europe and 8.6x more than Asia in Q1 2025.
India’s startup fundraising appears to be starting its recovery in 2024, with an 8% increase in 2024. China saw a sharp downturn, with startup funding down 43% year-over-year, hitting a 10-year low.
Looking forward: LP capital may become more selective, and regional dynamics can matter more than ever. Watch local venture activity and tactical plays.
Fewer Bets, Bigger Checks
Instead of a broader approach, investors are making high-conviction calls and writing bigger checks. It’s quality over quantity.
Key facts:
Deal count declined in the U.S. and Asia, indicating that capital is being selectively allocated.
Median deal sizes in the U.S. and Europe have been rising since 2023 and continued into 2025. Median Seed round in the U.S. rose to $3.5 million in 2024, up 53% since 2020, while other stages from Series B onward have yet to recover to 2020 levels.
Looking forward: “Mega-Seed” deals might be making headlines in the months to come. VCs will continue to double down on perceived winners earlier.
Valuation Reset
Valuations are creeping back up, but not without guardrails in place.
Key facts:
Seed-stage valuations in the U.S. have surpassed their 2021 peaks, even as later-stage valuations continue to recover more gradually.
Flat and down rounds reached a peak in 2024 in the U.S., with down rounds even occurring for prominent companies like Plaid.
Looking forward: Founders should brace for continued scrutiny. Look for a bifurcation: strong startup performers will get premium terms, while others will face tough negotiations.
Unicorns Evolve with Faster Paths
Reaching unicorn status takes more than hype. Companies with real traction, especially in AI, are advancing faster. Still, the exit path isn’t easy.
Key facts:
In 2024, startups reached unicorn milestone faster than ever, with nearly half hitting that valuation within five years of founding.
The pace of early-stage startups reaching the unicorn milestone has increased in 2024, with 39 early-stage startups attaining unicorn status — a 70% increase from 2023.
Looking forward: More unicorns are expected to emerge in Q3–Q4, but only in sectors with strong demand signals, particularly those connected with AI.
VC Fundraising: Big Names, Big Checks, Big Gaps
Established firms are thriving, raising massive funds and dominating capital formation. For newer funds, it’s a tough market. LPs are playing it safe, sticking with familiar names and proven track records.
Key facts:
In Q1 2025, the U.S. venture capital fundraising outpaced Europe by nearly 4x.
The resurgence of the U.S. mega funds ($1+ billion) in 2024 rebounded from 32% of total VC capital in 2023 to 46% in 2024.
Looking forward: How are current macro factors influencing U.S. dominance in VC fundraising? Expect the gap between top-tier and emerging funds to widen, as LPs continue to favor established names over unproven newcomers.
Talent Shuffle: Leaner Startup Teams, More VC Moves
The hiring game has changed. Founders are building lean, AI-powered teams and being selective about hires. Meanwhile, venture talent is in flux—some are launching new shops, others are exiting, and some are moving into operational roles. It’s a quiet reset that’ll shape the next generation of startups and investors.
Key facts:
As of April 18, 2025, 28K+ tech employees have been laid off. In 2024, the tech layoffs trended lower at 95K, much lower than 191K in 2023.
The time to first-, second-, and third-full-time hires is at an all-time high.
Looking forward: Are layoffs rising due to growing capital market uncertainty? And how is AI reshaping software development in startups? What might that mean for hiring trends ahead?
Final Word
We’re past the down phase but not quite in liftoff. The signals are there, if you know where to look. Capital is flowing, but carefully. Talent is repositioning. Big bets are being made, quietly. And exits, while still sluggish, are starting to stir.
If you’re in venture, this is the year to get clear-headed. To double down on what works and walk away from what doesn’t. No one’s handing out easy wins, but that’s the point. This is the moment where sharp investors separate from the crowd.
About the Contributor
Rohit Yadav, CAIA is the creator of The Big Book of VC, a quarterly insights project known for its “Venture Knowledge Alpha” tagline. His investment expertise goes beyond venture, spanning real estate, renewables, infrastructure and equities. As the host of TheOnePoint podcast, he explores niche venture topics with founders, VCs and LPs, bringing fresh perspectives to the industry. Rohit’s cross-functional background—spanning investments, technology, and operational areas like product management—equips him with a uniquely informed investment lens.
Learn more about CAIA Association and how to become part of a professional network that is shaping the future of investing, by visiting https://caia.org/