Pittsburgh's AI strength sends Q1 venture capital soaring
Pittsburgh started 2025 with more venture capital raised than any first quarter in a decade.
Companies in Pittsburgh raised a combined $689 million across just 12 deals during the first three months of the year, according to the latest Venture Monitor report from PitchBook and the National Venture Capital Association. The jumpstart more than doubles the region's Q1 2024 numbers of $267.1 million raised.
Fewer, larger deals with later-stage startups is a trend that has continued to define Pittsburgh's fundraising landscape since last year. The two biggest deals, later-stage raises from Agility Robotics and Abridge, raked in 90% of the total funds during the quarter.
This trend is not unique to the region, though. The US market's more risk-averse VCs seek investments they know they'll get their money back on, according to Anirudh Kapuria, principal investor at local firm BlueTreeVC.
'The current geo-political landscape, volatility in markets, fear of the effects of global tariffs and concerns of market liquidity have led to investors being more hesitant to deploy capital,' Kapuria told Technical.ly. 'Instead, funds are skewing towards having fewer but more established companies in their portfolios.'
Since 2014, the average deal count in the Pittsburgh region has been 23 per quarter, but with just 12 deals in Q1, it was the lowest deal count of any quarter in over a decade. However, the capital investment for Q1 exceeded the total capital raised in the region all last year, which was about $637 million across 70 deals, according to PitchBook.
'Early-stage startups should be concerned, but things may not be as horrible as they seem,' Kapuria said. Funding for those companies is still available but increasingly concentrated in AI and deep tech, meaning startups in other sectors may need to adjust expectations and explore bootstrapping or alternative funding sources.
Founders should also be cautious to make bets on just this Q1 data, according to Ven Raju, president and CEO of startup accelerator Innovation Works and managing director of early-stage venture capital fund Riverfront Ventures.
'While we saw a record-breaking investment of $689 million, it was dominated by two disproportionately large raises from companies in sectors with significant tailwinds, robotics and artificial intelligence,' Raju said. 'This quarter's distribution may simply reflect these outsized raises rather than indicate a definitive shift away from early-stage funding.'
Early-stage companies can switch up tactics to compete for VC
Pittsburgh touts itself as the robotics capital of the world and there's no question that robotics and AI remain a magnet for venture capital in the region.
Agility Robotics, maker of the humanoid robot Digit, raised $400 million in later-stage venture capital in March, raising the company's valuation to $1.7 billion. The AI note-taking startup Abridge raised $250 million in Series D funding in February, raising its valuation to $2.75 billion.
Other local startups in the space gained investment attention. Reporting in January claimed the Japanese investment company SoftBank was negotiating a $500 million investment in Pittsburgh robotics company Skild AI. That figure did not appear in the PitchBook report as there has been no formal filing.
These major fundraising rounds for AI-centric companies have a 'ripple effect' in the investor mindset, said Kapuria, and influence venture capital allocation towards associated industries and sectors.
'Investors are chasing AI deals, so if a startup has an AI angle, highlighting it can be a tactical advantage,' Kapuria said. 'Of course, care should be taken that this is not AI for the sake of AI, but actually a value-add to the solution and business of the startup.'
Of the few other top deals in Q1, tech and AI-powered robotics companies were the majority of the list:
Sportstech company Diamond Kinetics raised $18.6 million
AI-powered robotics company Thoro raised $6.1 million
Cyber insurance marketplace FifthWall Solutions raised $6 million
AI-guided vehicle startup Atlas Robotics raised $2.8 million
Robotics company Hummingbird Systems raised $2.6 million
Semiconductor manufacturer NovoLINC raised $2 million
Entrepreneurial networking company 1486 Labs raised $1 million
Only three of the top deals in the region, secured by Hummingbird, NovoLINC and 1486 Labs, were early-stage funding.
It's key that local startups show 'early traction and capital efficiency' if they hope to secure funding, according to Charles Mansfield, a startup ecosystem builder at InnovatePGH who's written about local VC and works extensively with early-stage startup founders.
'A pull-back on federal funding and private market uncertainty means that a lot of the usual funding stack is frozen for founders right now,' Mansfield said. 'Finding warm introductions to investors before you need to raise is the way to do it. All that being said, build like no one is going to save you.'
Just like Pittsburgh, the rest of the country feels the pinch
Pittsburgh isn't alone in AI companies leading venture capital investment. It's happening across the country, according to Kyle Stanford, director of US Venture Research at PitchBook.
' The US market has become very bifurcated between a handful of companies able to raise an endless amount of money,' Stanford said, 'and the rest of the market that continues to struggle through a capital shortage.'
Of the total deal value in the US, 71% went to AI investment, according to Stanford. Excluding OpenAI's $40 billion round in March, AI still captured 48.5% of the total invested during the quarter.
However, the return on these investments remains to be seen. Outside of a few transactions, including 12 completed public listings and a couple high-profile acquisitions, the liquidity market remained subdued, Stanford said.
'Lack of distributions continues to pressure the fundraising market,' he said. 'Just $10 billion in new commitments were closed in Q1, setting the year on pace for the lowest fundraising environment since 2016.'
An expected rebound of the VC market no longer seems likely, according to Nizar Tarhuni, executive vice president of Research & Market Intelligence at PitchBook, because new tariffs and policy shifts are having a real impact.
'These impacts amplify economic uncertainty,' Tarhuni said, 'and could further disrupt the private markets by complicating investment decisions, supply chains, exit windows and portfolio strategies.'
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