After a cautiously optimistic close to 2024, Q1 2025 brought a measured pullback in venture activity. Rather than a dramatic downturn, the market saw a strategic recalibration. Deal sizes declined 7.5% to 31% across most stages, and valuations dropped by as much as 37% quarter-over-quarter—clear signs that investors are proceeding with greater discipline.
Still, it wasn’t all contraction. Series A and Series D+ rounds were notable exceptions, with funding amounts rising 6.2% and 30%, respectively. These pockets of growth suggest that investors are making high-conviction bets where they see breakout potential or late-stage efficiency.
Other subtle shifts include a reduction in average board size for Series C+ companies and slightly improved dilution for founders, hinting that those able to raise capital are often doing so from a position of relative strength. Overall, Q1 showed a market leaning into quality over quantity, with investors doubling down on strong teams and clear roadmaps.
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