Artificial intelligence startups captured an unprecedented 57.9% of global venture capital investments in the first quarter of 2025, according to a report released Thursday by research firm PitchBook. This represents a dramatic increase from the 28% of venture funding that flowed into AI startups during the same period last year, highlighting investors' growing focus on the technology.
What to Know:
- AI startups received 57.9% of global venture capital in Q1 2025, up from 28% in Q1 2024
- The sector raised $73 billion in Q1, with OpenAI's $40 billion round accounting for more than half
- Crypto venture funding reached $4.8 billion in Q1, showing signs of recovery after a prolonged slump
The concentration of capital was even more pronounced in North America, where AI ventures secured 70% of all regional venture funding during the quarter.
"Investors still have an AI FOMO [fear of missing out] problem," PitchBook noted in its April 17 analysis of the investment landscape.
Global AI investments reached $73 billion in the three months ending March 31, exceeding half the total value of AI-related deals completed in all of 2024. However, a single transaction dominated this figure. OpenAI closed a massive $40 billion funding round led by SoftBank on the final day of the quarter, accounting for more than half of all AI investment.
The quarter also saw other substantial AI funding rounds, including Anthropic's $3.5 billion Series E raise in March. Industry experts suggest the pace shows no signs of slowing despite concerns about market saturation.
Maria Palma, general partner at Freestyle Capital, explained the continued investment surge: "The fear of somebody else winning your market has never been higher than it is now. You haven't seen a slowdown because the rate of change on the technology side is almost indigestible."
Some investors, however, are expressing caution amid the enthusiasm. Nnamdi Okike, co-founder and managing partner at 645 Ventures, warned of potential market correction. "There are extremes happening, and that's going to mean there's going to be a lot of losers," Okike said.
Crypto Funding Shows Signs of Recovery
While AI dominated headlines, the cryptocurrency and blockchain sector quietly showed signs of renewed investor interest. Crypto startups raised $4.8 billion in the first quarter, according to data from CryptoRank. This represents a significant recovery, with funding more than quadrupling from the $1.1 billion raised in the fourth quarter of 2024.
Nearly half of the quarter's crypto funding came from a single investment: Abu Dhabi investment firm MGX's $2 billion stake in cryptocurrency exchange Binance. Despite this concentration, the quarter still marked the strongest period for crypto venture capital since the third quarter of 2022.
The resurgence in crypto funding coincides with what industry observers describe as an increasingly accommodative regulatory environment in the United States. This shift appears to be encouraging venture capitalists to reconsider the sector after a prolonged funding winter.
Evidence of this renewed interest emerged Thursday, as reports indicated Mike Novogratz's Galaxy Ventures Fund I was poised to exceed its $150 million funding target. Sources familiar with the matter suggested the fund could reach $180 million when it closes at the end of June.
Final Thoughts
The first quarter of 2025 demonstrates a stark disparity in venture capital allocation, with AI startups receiving nearly 60% of global investment dollars. While this concentration raises concerns about potential market imbalances, it reflects investors' conviction that artificial intelligence represents the next frontier of technological and economic disruption. Meanwhile, the modest but meaningful recovery in crypto funding suggests venture capital strategies may be diversifying as regulatory clarity improves.