In Q1 2025, AI startups captured 57.9% of global venture capital (VC) investment, totaling $73.2 billion of the $126.3 billion raised by startups worldwide, according to the State of AI Venture Capital in 2025 report.
The AI sector’s dominance in VC funding has grown significantly since 2015, when it accounted for just 8.6% of global deal activity. With the global AI market projected to reach $4.8 trillion by 2033, investor interest remains strong.
OpenAI’s $40 billion funding round, led by SoftBank, set a record for the largest private tech investment ever, boosting its valuation to $300 billion and cementing its status as the world’s most valuable AI startup, behind only ByteDance and SpaceX among global unicorns.
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Meanwhile, despite the increased growth in the first quarter of 2025, recent data suggests investor enthusiasm may be cooling. The number of VC-backed AI deals dropped to a five-year low in Q1 2025, with only 2,101 completed funding rounds, down from 2,516 in Q1 2024 and 3,022 in Q1 2022.
However, startup funding increased, with VC firms’ funding reaching $126.3 billion in the first quarter of 2025. Still, this is nowhere near the record-high venture capital activity in 2021. In the last quarter of that year, the funding raised from venture capital firms peaked at $211.4 billion, according to data from Pitchbook.
While OpenAI’s $40 billion investment round made up a significant portion of that total, Q1 2025 would still rank as the strongest first quarter for AI venture deals even without this landmark investment.
Although AI VC deals have surged in value, deal count fell to its lowest point since Q1 2021, as explained above. VC firms recorded a total of 2,101 AI investment deals this quarter, compared to 2,516 in Q1 2024 and 2,332 in Q1 2023. This trend may be attributed to the high failure rate of newly founded AI startups; data shows that over 90% of AI startups fail within the first five years.
Reports reveal that VC firms are increasingly cautious about investing in AI startups without a clear path to monetisation. The largest AI investments in Q1 2025 were all late-stage deals, reflecting a preference for backing proven companies over taking risks in an increasingly saturated market.
The Biggest VC Deals So Far in 2025
OpenAI made history this year by signing a $40 billion private funding deal, with SoftBank as the lead investor. Not only was this the biggest AI deal of the year, but it also broke the record for the largest private tech investment of all time. Following the deal, OpenAI’s valuation rose to $300 billion, making it the world’s most valuable AI startup and the third most valuable unicorn globally, after ByteDance and SpaceX.
Anthropic’s $3.5 billion funding round, led by VC firm Lightspeed Venture Partners, placed the company in second for the highest private funding round of the quarter. The deal raised Claude AI’s parent company’s valuation from $58 billion to $61.5 billion. Anthropic now ranks third among all AI startup unicorns.
Coming in third is Infinite Reality, a 3D technology, AI, and entertainment company. Earlier this year, it received a $3 billion investment from an anonymous contributor (who according to the startup cited by Forbes is represented or connected to Sterling Equities and the prominent Katz family), raising its valuation to $12 billion. In April 2025, Infinite Reality’s valuation rose again to $15.5 billion following its acquisition of an AI avatar company.
Regionally, European VC firms invested $5.10 billion in AI during Q1 2025 across 525 deals, representing 24.98% of the 2,101 VC-backed AI deals for the quarter. Data from the rest of the world shows 90 additional AI deals were made, with a combined investment of $500 million. Globally, venture deals peaked in 2021 with 57,386 recorded transactions, while AI has accounted for an increasingly larger share of total VC activity in recent years.
While Q1 2025 funding outpaced recent years, it remains below the 2021 peak of $211.4 billion in Q4. The trend of fewer but larger deals suggests a maturing AI market, with investors favoring scalability and clear monetization paths over speculative early-stage ventures.