April 3, 2025

Early and often

Hi there, 

Here is this week’s Hot or Not.

Hot: Early-stage AI megadeals

Early-stage AI startups are seeing late-stage dollars. 

In Q1’25, 8 seed and Series A companies raised rounds of $100M or more — the highest count on record.

These deals brought in a combined $1.8B, with an average round size of $222M, highlighting investors' willingness to place substantial bets on AI startups earlier than ever.

Several are focused on AI agent frameworks, while others — like Isomorphic Labs, Apptronik, and The Bot Company — are tackling deep tech applications like drug discovery and robotics.

While global venture deal count fell overall, AI is the clear outlier, pulling in a record 20% of all deals and more than half of the quarter’s funding.

You can see the full list of early-stage standouts in our latest State of Venture report.

Not: Clinical progress for AI-designed drugs

One of those early-stage megadeals went to Isomorphic Labs, which raised $600M this week. 

Backed by Thrive Capital and built on AlphaFold’s Nobel-winning science, the company has bold ambitions to “solve all disease” using AI.

But the science still needs to prove itself. 

In 2023, two high-profile AI-designed drugs — from Exscientia and BenevolentAI — were pulled from Phase 2 trials due to safety and efficacy issues.

And since then, while AI-discovered molecules have shown 80–90% success rates in Phase 1, their overall success remains low, as they’re now hitting the same attrition rates as traditional drug programs in later stages.

One of the few AI-designed assets to reach Phase 3 is Nimbus Therapeutics’ Zasocitinib, sold to Takeda for $4B. 

Others, like those from Insilico and Aulos, are still in Phase 2.

For AI drug discovery to scale, it needs more than speed. It needs clinical wins.

See which AI-designed drugs are furthest along — and what’s still stuck in the clinic — in our latest drug discovery brief.

Hot: AI agents in exec chatter

Execs can’t stop talking about AI agents.

Mentions of “agent” and “agentic” on earnings calls surged in Q1’25 — both hitting all-time highs.

Behind the buzz: AI agent startups raised $3.8B in 2024 — nearly 3x the 2023 total. 

The space now spans 170+ companies across 26 categories, from customer support to vertical tools in healthcare and finance.

Most agents still operate with training wheels — more capable than copilots but not fully autonomous. But advances in memory, planning, and tool use are pushing the space forward fast.

The AI agent arms race is on.

Explore the full AI agent landscape using our latest market map.

Not: VC deals

VC funding is up, but the number of deals keeps sliding. 

In Q1’25, global deal count dropped 8% quarter-over-quarter and 28% year-over-year — marking the fourth straight quarter of decline.

Even as total funding reached $120.9B, fueled by OpenAI’s monster $40B round, activity is consolidating at the top: mega-rounds (deals worth $100M+) accounted for 70% of dollars raised.

That means fewer bets overall — and a tougher climb for startups without breakout traction or founders with proven success.

Get the full breakdown of Q1 venture trends in our latest report.

The +1

Cornered. Everything’s fine until you meet 100 in the bottom right.

I love you.

Anand

@asanwal 

Co-Founder & Exec Chair

P.S. Join us April 24 for the big reveal of the AI 100 — our annual list of the most promising private AI companies and the trends to watch in 2025. Register for the briefing here.

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