Gary Higgins
Artificial intelligence deals led every area of venture capital investment in the first quarter, and Massachusetts deals held their own against stiff West Coast competition, according to newly released data.
Despite being much smaller, in terms of population, Massachusetts ranked third behind California and New York for venture capital deals and total VC deal value in Q1, according to first-quarter data from analysis firm Pitchbook.
California is home to startups like OpenAI and Antrhopic, which saw massive deals in Q1. In fact, AI led the way in the first three months of the year, with AI deals comprising 71% of total deal value in the U.S. Even excluding the $40 billion OpenAI deal, AI as an investment area still captured 48.5% of the total amount invested during the quarter and one-third of completed deals.
In Boston, Q1 saw the birth of three new unicorns across verticals. Liquid AI, Boston’s own unicorn AI company, announced its deal in late Q4 but was part of the larger trend of heightened AI investment.
Compared with the end of Q4, Mass. isn’t too far off from where things left off in the last quarter, bringing in 182 total deals compared to the 196 deals in Q4, according to Pitchbook and the National Venture Capital Association. Compared to the 179 deals in the first quarter of 2024, it looks like VC deals in Mass. are moving at a steady pace, if not a little ahead of pace, compared to last year.
In total, $3.7 billion in capital was invested in Massachusetts companies in first-quarter 2025, down slightly from $4.1 billion in fourth-quarter 2024. Despite the market volatility caused by the fluctuating tariff policy from the Trump administration, the pace of investment capital in first-quarter 2025 is ahead of the $3.2 billion of capital in the year-earlier Q1.
Startup ‘exits’ slow
First-quarter investment capital has remained steady in Mass. for the past couple of years, hovering between $3 billion and $4 billion, which is leveling back to normal from its post-pandemic highs of $6 billion and $8 billion first quarters.
Exits, however — whether from an M&A deal, IPO or other transaction — were down. According to Pitchbook data, there were 16 exits in Q1 2025, compared to 28 in Q4 2024, and 20 in Q1 2024. Exit value for the quarter totaled $1.8 billion.
With ongoing tariff pressure, it’s hard to predict their impact on the fundraising landscape and VC dollars. Pitchbook analysts expect significant pressure on fundraising and dealmaking in the near term as investors wait for signs of market stabilization.
“While the tariff endgame remains subject to ongoing negotiations with key trading partners, we are hopeful the dust could start to settle on this topic over the next few months,” said the head of research and commercial banking, Ginger Chambless in a statement accompanying the report. “Even though companies reliant on imports and international supply chains will have to navigate a period of adjustment, improved clarity on the state of play should help pave the way forward for business investments and growth strategies.”