The global venture capital landscape in Q1 2025 has split sharply into two worlds: artificial intelligence (AI) and everything else. According to PitchBook’s latest First Look datasets, AI continues to dominate VC funding, claiming an unprecedented 57.9% of total capital deployed worldwide.
This surge was punctuated by OpenAI’s staggering $40 billion funding round on the last day of March, setting a new record for private tech investments.
The quarter saw eight deals exceed $1 billion, with seven tied to AI—only Binance, a crypto exchange, bucked the trend.
Meanwhile, non-AI sectors are really struggling, with deal counts hitting a decade-low and their combined deal value nearly eclipsed by just those seven AI mega-deals.
PitchBook’s data reveals an environment of a market increasingly betting on AI’s transformative potential, while other industries struggle for attention and capital.
OpenAI’s round wasn’t just a headline—it was a seismic event, pushing AI’s quarterly deal value to new heights.
Companies like CoreWeave, which went public in a high-profile U.S. IPO, further underscore AI’s gravitational pull, with its exit alone accounting for 26% of global VC exit value in Q1.
Yet, beyond AI, liquidity remains a persistent issue.
IPOs are scarce, and while the year isn’t over, market volatility—exacerbated by external pressures like President Trump’s new tariff regime—casts doubt on a near-term rebound.
PitchBook notes that non-AI companies are facing a funding drought, with investors doubling down on AI’s promise over broader diversification.
This bifurcation signals a high-stakes shift: AI is thriving, but the rest of the VC ecosystem is treading water.
Adding to the complexity, Trump’s tariff policies are injecting fresh turbulence into private markets.
PitchBook’s Q2 2025 analyst note dissects how this protectionist pivot is unsettling investors.
With dealmaking already subdued and exits faltering, tariffs amplify recession fears and muddy decision-making.
Markets are rattled, and private capital players—spanning VC, private equity, and beyond—face heightened risk.
The note highlights immediate impacts: increased volatility is forcing asset-allocation headaches, while supply chain disruptions loom as a long-term concern.
Capital flows could shift as firms adapt, potentially birthing tariff-driven investment niches—like domestic manufacturing or tariff-immune tech sectors.
For private market participants, the stakes are rising.
PitchBook suggests that while tariffs deepen hesitation, they also offer opportunities for the nimble.
Investors might pivot to sectors less exposed to trade friction, or capitalize on reshored industries.
Yet, the overarching mood is cautious for now at least. Deal activity outside AI is sluggish, and exits, beyond outliers like CoreWeave, remain elusive.
Globally, Europe and the U.S. mirror this trend—AI’s dominance overshadows a broader slowdown.
As PitchBook’s datasets indicate, this year is shaping up as a time-period witnessing AI’s relentless ascent along with a tariff-stressed landscape where adaptability is key to survival.
For investors, navigating this market demands both vigilance and long-term vision.