Q1 2025 B2B Distribution Tech Investment Report
2025 Is Off to a $3B+ Start and On Track for the Strongest Results in Years
Hi everyone,
It’s time for our quarterly State of B2B Distribution Tech report. Looking back at Q1 2025’s investment trends gives us an early read on what’s shaping up to be one of the strongest years in recent memory for distribution tech.
The full report – available exclusively to premium subscribers – includes a breakdown of CVC activity, a look at the most active VCs in Q1, insights on sector trends, and the latest updates to our Distribution Tech Index.
Let’s get into some key details from Q1!
AI Is Eating the Market, 71% of the Market to be Exact
The AI wave continues to dominate the overall VC landscape. 71% of all VC dollars in Q1 went into AI/ML companies – largely driven by mega-deals for OpenAI, Anthropic, and Groq. While deal count was flat, capital concentrated into fewer, much larger rounds
Key Findings for Distribution Technology in Q1 2025
Q1 distribution tech funding hit $3.12B, continuing the momentum from late 2024 and marking one of the strongest Q1 performances in recent memory. Capital is consolidating into fewer, larger, and later-stage deals — a sign of sustained investor confidence in proven platforms.
Median deal size reached $28.8M, a more than 5x increase from 2023 levels. The shift toward quality and scale is now clearly reflected in the numbers.
Corporate Venture Capital Comes Roaring Back
For Distribution Technology, CVC participation in Q1 2025 deals rose to 20% by count and ~22% by capital invested, rebounding sharply from just 9% in Q4 2024. The largest CVC-backed deal was a $126.6M Series C into BuildOps (backed by Schneider and Siemens), continuing a trend of strategic dollars flowing into field operations and vertical SaaS.
Later-Stage Deals Lead the Way
63% of Q1 2025 deals were late-stage (Series C+ or Growth)
Angel + early-stage activity remained muted at just under 20% combined
“Other” categories (M&A, secondary, debt) represented ~18% of deal activity
Top CVC-Backed Deals of Q1
FJ Labs took home the prize for the most investments in Q1 with 4 investments! In Q4, FJ Labs took the prize with a whopping 5 distribution tech investments in the quarter. Both of Applico Capital’s investments haven’t yet been announced – putting us in a tie with a number of other venture investors who made 2 investments last quarter.
2025 Annual Outlook
Historically, ~19% of annual capital is deployed in Q1. At $3.12B raised, 2025 is pacing toward $16B+ – setting the stage for another banner year in distribution tech.
The flight to quality is real: investors are bypassing early-stage risk and focusing on category leaders, infrastructure platforms, and scaled vertical solutions.
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