VC activity ticked up in Q1 based on OpenAI’s unconventional corporate investment from Microsoft. We tracked $22.7 billion in investment during the quarter, including $12.7 billion from generative AI investments including OpenAI. If OpenAI’s deal is excluded, then VC deal activity continued to decline in terms of deal value and count. Vertical applications companies only raised $6.0 billion in Q1 after raising $50.6 billion in 2022, demonstrating weakness in conventional domain-specific software. Investors lack interest in software solutions unless they drive the generative field forward. Generative AI software continues to earn outstanding valuation multiples, with research startups striking deals based on the level of computing power and talent they will need to make breakthroughs. VC investors are adapting to these requests yet not supporting the capital demands of more mature companies that are unlikely to make research breakthroughs.