Venture capital's hopes of a 2025 resurgence have all but 'dimmed.' Blame the whipsawing stock market.

• Global tariffs took effect and has the venture capital industry on edge.
• As a result, PitchBook's outlook for dealmaking and liquidity this year has dimmed.
• An IPO market on ice and limited M&As means less capital flowing through the industry.

The venture capital ecosystem is still reeling from President Donald Trump's unleashing of global tariffs, which sent shockwaves through the global economic system.

That's sparking fears of another funding chill that resembles what occurred in 2022. It's also led private markets data firm PitchBook, which just released its first quarter overview of the venture market, to reverse course on its once rosy outlook for the industry in 2025, now painting a rather grim picture for the rest of the year.

"The reality of a VC market rebound has likely faded as the effects of new tariffs and policy shifts take hold," said Nizar Tahruni, executive vice president of research and market intelligence at PitchBook.

Because of the ongoing "economic uncertainty," it "could further disrupt the private markets by complicating investment decisions, supply chains, exit windows and portfolio strategies," he added.

Two factors are at the heart of this forecast: liquidity and its impact on how VCs make deals with startups and their founders. When there's market instability like we're currently experiencing, VCs tend to buckle down and wait out the volatility. This purse tightening has broader implications for the startup ecosystem.

"It's not like the venture funds who have capital all of a sudden don't — they do — but now they're starting to prolong how they think about deploying that capital," said Marcos Fernandez, cofounder and managing partner of Fiat Ventures.

This means VCs could be writing fewer checks, knowing that they'll have to prolong their own cycles when they return to their limited partners to ask for money for their next funds, Fernandez added.

Market uncertainty has also put the hopes of an IPO resurgence on ice. IPOs are a key driver of liquidity in venture capital, and VC has been eagerly awaiting their revival since the glory days of 2021. Those hefty investment returns oftentimes get recycled back into the VC market, too, via checks to startups and VC funds.

Another key source of liquidity, mergers and acquisitions, have been muted at best. During the first quarter, M&A has been focused on younger companies with lower valuations — 76% of the companies bought in Q1 hadn't raised a Series B funding round — PitchBook notes in its report, "yielding returns that many VC firms would find unsustainable."

One of the acquisition bright spots was Google's deal to buy cloud security startup Wiz for $32 billion, its largest-ever purchase to date. The deal is pending a US antitrust review.

To be fair, it's not all doom and gloom in the venture world. The first quarter's dealmaking pace was par for the course and comparable to prior quarters. PitchBook estimates 3,990 deals were made in the quarter in the US, with a total deal value of $91.5 billion. That figure includes OpenAI's $40 billion round, which accounts for about half of the quarter's haul, Anthropic's two funding rounds totaling $4.5 billion, and AI chip startup Groq's $1.5 billion round.

Here's the caveat: Most of those deals, about 71% of them, were done with AI startups, according to PitchBook data. So while it's likely AI startups will continue to get capital and the kind of VC interest they've seen over the past two years, it remains to be seen how the rest of the industry will fair.