The venture capital market reminds me of a roller coaster—but probably not the kind you’re imagining.
Think about that moment right after you’re seated and strapped in. The car is climbing—click, click, click—and you’re working your way up, expecting freefall any minute. But what if that drop never quite materializes? What if you’re stuck on the way up?
VC these days feels caught in the climb. There’s AI optimism, there’s deal flow, and a resilient sense of purpose—but the payoff keeps stalling for one reason or another. Take IPOs: Klarna, CoreWeave, and Hinge Health all filed to go public in quick succession. CoreWeave took the plunge, only for markets to get throttled by Trump-fueled tariff news. Klarna and Hinge Health? They’ve since reportedly backed off, indefinitely.
AI, meanwhile, is a lifeline, and the dominant force in the marketplace. It seems obvious enough, but when the data comes out, it’s so stark it bears repeating: For Q1 2025, AI has accounted for 71% of total VC deal value, according to new PitchBook data. That’s on track to be a substantial jump from 46.8% last year. This includes Anthropic’s $4.5 billion round, Groq’s Saudi Arabia-fueled $1.5 billion, Infinite Reality’s $3 billion round, and OpenAI’s unparallelled $40 billion round—the largest private funding round in history. CVCs are operating in lock-step, with 41% of their Q1 deals AI-focused, according to PitchBook.
But looking at other numbers, cracks start to show. M&A has been happening, including some very high-profile M&A—here’s looking at you, Wiz—but most M&A has been skewed towards smaller companies: PitchBook estimates 76% of completed acquisitions happened before the acquired company raised its Series B. Which is tough: M&A of any kind feels like good news, but as it currently exists, VC demands larger exits in the long-term. First-time financing is also elusive for many—in Q1, PitchBook counted $3.8 billion invested across 892 first-time deals, down year-over-year from $4.1 billion in Q1 2024.
There is good news, of course, with the $32 billion Wiz acquisition and the CoreWeave IPO drumming up more exit value since the last quarter of 2021. But clarity remains hard to come by. I’ve been thinking a lot this week about United Airlines, and the two completely different scenarios it outlined in its guidance. That resolute uncertainty feels like a microcosm of the broader landscape.
This is the year of no guidance. Relentless volatility brings motion, but not direction.
Which, I suppose, is why it feels like we’re stuck on the ride.
See you tomorrow,
Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com
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This story was originally featured on Fortune.com
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2025-04-24 11:14:01
