Venture capital's hopes for a strong 2025 resurgence have dimmed, largely due to the volatile stock market and policy changes. According to the latest report from PitchBook, a leading private market data analysis firm, the global venture capital (VC) market's outlook for the first quarter of 2025 is decidedly uncertain. The report highlights that heightened market instability has complicated decisions related to investments, supply chains, exit strategies, and portfolio management, leading to a dampened expectation for market revival. Nizar Tahruni, PitchBook's Executive Vice President of Research and Market Intelligence, explained, "The likelihood of a rebound in the venture capital market has been significantly reduced by the impact of new tariffs and policy changes." This uncertainty has made VCs more cautious, extending their investment cycles and potentially reducing the flow of funds to startups. Marcos Fernandez, co-founder and managing partner of Fiat Ventures, added that even with available capital, funds are being more judicious in their allocations, as they need to prepare for longer periods before approaching limited partners for subsequent rounds of financing. The Initial Public Offering (IPO) market, which hit a high in 2021, is now effectively frozen due to these uncertainties, eroding market liquidity. IPOs are a crucial mechanism for VCs to recoup their investments and generate returns, and the decline in IPO activity disrupts the capital cycle. Additionally, mergers and acquisitions (M&A) activity has weakened, with the first quarter seeing a focus on early-stage, lower-valued companies. These smaller deals offer lower returns and do not provide the sustained capital flow that VCs typically seek. However, despite the overall pessimistic atmosphere, the first quarter of 2025 still saw significant transaction volumes and values. PitchBook estimates that the U.S. alone witnessed 3,990 deals, totaling $91.5 billion. The standout event was Google's acquisition of cloud security startup Wiz for $32 billion, the tech giant's largest-ever purchase, though it remains subject to U.S. antitrust approval. A notable aspect of the $91.5 billion in deals is that roughly 71% of the funds flowed into the artificial intelligence (AI) sector. This includes OpenAI's $40 billion financing round, Anthropic's two rounds totaling $4.5 billion, and Groq's $1.5 billion funding for AI chip technology. Despite the robust activity in AI, the market remains cautious about the prospects for other industries. This trend underscores the profound impact of market conditions on startup investment and financing. Experts predict that short-term investment in AI will continue, driven by the sector's rapid advancements and high demand. However, the broader venture capital market may face more substantial challenges and require a longer period to recover fully. PitchBook's report, a critical reference for the VC industry, provides a realistic snapshot of the market. The cautious approach taken by institutions like Fiat Ventures further illustrates the industry's sensitivity and adaptability to market changes.