Startups attracted $91.5 billion in venture capital funding in Q1, according to the latest report from data provider PitchBook. This figure not only exceeds the previous quarter’s allocation by 18.5% but also represents the second-highest quarterly investment in the last decade.
Despite this seemingly positive news, Kyle Stanford, lead U.S. venture capital analyst at PitchBook, appears to be the most bearish about VC dealmaking since he started covering this market 11 years ago.
The source of Stanford’s negativity? Shattered expectations that 2025 would bring significant exits, creating a cycle where IPOs and big acquisitions would generate tons of cash for investors — and founders — who would then channel plenty of cash back into startup funding. That is, after all, the Silicon Valley way.
But the stock market volatility and fears of a recession triggered by President Trump’s tariff policy have derailed these hopes. Startups don’t want to debut on the public markets during a time when stock prices are depressed because of global economic issues.
“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 told TechCrunch.
Several companies, including fintech Klarna and physical therapy company Hinge, have already postponed or are reportedly considering delaying their IPOs amid the market turbulence.
As for the strong dealmaking totals in Q1, Stanford said that the metric didn’t paint a complete picture of investor excitement for startups.
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San Francisco | October 27-29, 2025 REGISTER NOWOf the $91.5 billion raised by U.S. startups last quarter, a staggering 44% was invested in just one company: OpenAI’s $40 billion round. PitchBook also found that nine other companies raising $500 million or more, including Anthropic’s $3.5 billion and Isomorphic Labs’ $600 million round, accounted for an additional 27% of the total deal value.
“Those deals are really masking the challenges many founders are going through,” Stanford said. “I think there are a lot of companies that are going to need to come to terms with down rounds or getting acquired for large discounts.”
Investors and analysts have been predicting widespread startup collapse since the ZIRP era ended in 2022. And many did fail, but other startups cut costs, and a strong economy allowed them to keep growing, even if their growth rate fell below investor expectations. But, as we previously reported, they are hanging on by a thread, with 2025 forecasted to be another difficult year for startup shutdowns.
“If there’s a recession, they lose a lot of their revenues and growth,” which could force them to be sold for cents on the dollar or go out of business, Stanford said.
Startups and investors were looking to 2025 for a market turnaround, but instead, a potentially rougher economy could speed up the end for many startups.