Welcome to the Q1 edition of Cut Through Quarterly. A huge thank you to HSBC, Corrs, and Vanta for their continued long-term support. And a warm welcome to the teams at Rippling and Notion, who we'll be collaborating with throughout 2025. We're also pleased to be working with TrueState as our official AI partner this year. There are some exciting initiatives in the pipeline to bring further insight to the ecosystem.
As always, we're grateful to the 112 investors who completed our Investor Sentiment Survey. This quarter, we welcomed the team from Tractor Ventures for a guest contribution, offering context on how their customers have adapted over the rollercoaster of the past few years.
Q1 kicked off with strong momentum, with $993 million raised across 100 deals, our best start to the year since 2022. Activity was evenly spread across stages, with Pre-Seed through to Series B+ all seeing solid volume. AI-first startups led on deal count for the first time, even as stealth rounds supporting founders building under the radar hit an all-time high. Sectors beyond pure software, including biotech, hardware and climate tech, collectively outpaced the traditional business software segments that typically dominate the funding leaderboard.
Investor sentiment continued to improve. Portfolio health lifted, shutdowns declined, and most investors reported seeing more deals, and of better quality. Valuations rose across the board, with Series A median round sizes hitting record highs. But the picture isn’t without friction, with mid-sized deal announcements dropping to their lowest level since mid-2023. There are also plenty of known and unknown macro-unknowns making their presence felt by the ecosystem.
Science and deep tech startups dominated in both funding and deal count. Biotech and Medtech led the way, while AI and climate tech vied for the title of the most active sector. Notably, 62% of startups that raised capital mentioned AI on their website as a key product feature – some genuinely, and others clearly riding the wave of investor and customer interest in software’s newest toy.
We hope you find the report useful. You can read it here. Please give our LinkedIn post a thumbs up or leave a comment to help expand the reach of our reporting.
