US Startup Funding Overview – May 2025
Key Insights – May 2025
May 2025 continued the funding recalibration trend with $10.15 billion invested across 458 companies. While this represents a 20.0% decrease from April’s $12.69 billion, the market shows signs of stabilization with increased deal volume (+25.5% more companies funded than April). The year-over-year comparison reveals a more challenging environment, with a 27.5% decline from May 2024’s $14.0 billion.
Artificial Intelligence maintains its leadership position at $3.80 billion, though at more sustainable levels than previous months. The data shows continued investor interest in AI and technology companies, with an average deal size of $22.1 million indicating more measured investment approaches compared to the mega-rounds seen earlier in 2025.
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Top Industries by Investment
| Industry | Total Funding | Deal Count | Avg. Deal Size |
|---|---|---|---|
| Artificial Intelligence (AI) | $3.80B | 108 | $35.2M |
| Software | $2.24B | 115 | $19.5M |
| Machine Learning | $2.23B | 27 | $82.6M |
| Generative AI | $1.73B | 16 | $108.1M |
| Information Technology | $1.60B | 75 | $21.3M |
Top Deals of May 2025
| Company | Amount | Round | Industry | Location |
|---|---|---|---|---|
| Grammarly | $1.0B | Series Unknown | AI, Copywriting | San Francisco, CA |
| Wonder | $600M | Series Unknown | Food Delivery | New York, NY |
| Perplexity | $500M | Series Unknown | AI, Search Engine | San Francisco, CA |
| Rippling | $450M | Series G | HR, IT Management | San Francisco, CA |
| Pathos | $365M | Series D | AI, Biotechnology | New York, NY |
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Detailed Analysis
Market Context
Total US startup funding in May 2025 reached $10.15 billion across 458 companies, showing a -27.5% decrease year-over-year but demonstrating market resilience with increased deal activity. The 25.5% increase in funded companies compared to April suggests investors are spreading capital across more opportunities, though at smaller average deal sizes.
Key Metrics
- Average deal size: $22.1 million (-36.4% vs April 2025)
- Largest deal: Grammarly at $1.0 billion
- Funded companies: 458 (+25.5% vs April 2025)
- AI funding dominance: 37.4% of total funding
Industry Insights
AI continues to lead with $3.80 billion across 108 companies, representing 37.4% of total funding. The technology sector shows particular strength with Software ($2.24B), Machine Learning ($2.23B), and Generative AI ($1.73B) commanding significant investor attention. Notable is the emergence of specialized AI applications, with companies like Grammarly ($1.0B) and Perplexity ($500M) leading the charge.
Market Trends
The funding landscape shows signs of normalization following the exceptional activity in early 2025. With more companies receiving funding but at smaller average sizes, investors appear to be taking a more measured approach, focusing on companies with proven business models and clear paths to profitability. The continued strength in AI and technology sectors reflects ongoing confidence in these transformative technologies.
Notes:
- Data compiled from US startup funding rounds in May 2025
- Companies may be counted in multiple industry categories
- Grammarly’s $1B round represents 9.9% of the total funding for the month
- AI-related companies (AI, Machine Learning, Generative AI) collectively received $7.76B (76.5% of total funding)
- Average deal size reflects the broader market trend toward more measured investment approaches
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