Venture capital dropped again in Baltimore last quarter, as investors pulled back amid a broader dip that mirrors national market trends.
Companies secured $70.8 million across 15 deals in the Baltimore region in Q2 2025, according to the latest Venture Monitor report, released quarterly by PitchBook and the National Venture Capital Association.
That represents a 46% drop compared to the first quarter of the year, which brought in $132 million across 21 deals. Q1 had already marked a slowdown from the last quarter of 2024, when investment jumped to close out the year.
The continuous downturn in the Baltimore region isn’t surprising to McKeever “Mac” Conwell, founder of local firm RareBreed Ventures, who said the VC industry is still undergoing a “reset” after the boom in 2021.
“It’s a lot of macro trends that we’re seeing in the data, but playing out here locally,” Conwell said. “Generally speaking, the funding market has been really, really tough the last three years.”
UpSurge Baltimore, which also tracks local venture capital activity, reported a different figure for Q2 total investment: $93 million.
According to UpSurge data analytics manager Chris Bunner, it’s a good reflection of Baltimore’s core funding base, which he pegs at $90–$100 million per quarter. In past years, quarterly totals were often inflated by one or two mega deals, he said, so current figures appear lower by comparison.
Over the past decade, local VC funding has gone on a volatile ride. Activity ramped up in 2018, with funds deploying capital faster than ever, according to RareBreed’s Conwell. After a brief pause at the start of the pandemic, capital flooded in — fueled in part by the crypto boom, he said — which created massive liquidity and drove up startup valuations. Many venture firms were investing their funds in just 1 to 2 years instead of the usual 3 to 5, pushing limited partners to keep up with the faster pace.
When public markets dipped in 2021 and 2022, it put a damper on investor enthusiasm, Conwell said. That made their venture allocations look disproportionately large, causing many to pause or reduce their commitments to VC funds.
With less capital flowing into firms and many early-stage investments made at inflated valuations, the industry was forced to slow down.
“Everybody’s like, ‘Oh, we’ve overspent and spent way too much money, way too fast. Now let’s take a step back,’” Conwell said.
AI is investor catnip, but the local pipeline remains strong
While overall funding remains tight, certain sectors are emerging as clear priorities for investors, shaped in part by shifting federal policy and economic focus under the Trump administration, according to the NVCA Q2 report.
“Companies operating in AI, national security, defense tech, fintech, and crypto — sectors aligned with the administration’s priorities — are attracting disproportionately more investor interest, and this trend will likely continue throughout President Donald Trump’s term,” the report read.
Conwell also noted the heavy investment concentration in AI companies. Even startups that aren’t AI native, he said, are often fitting it into their strategies to remain competitive in the funding landscape.
This focus is reflected in Baltimore’s two biggest deals of the quarter: Pixee, an AI-powered cybersecurity platform, and Impact Analytics, which applies AI to data analytics. Each secured $15 million.
It’s likely that biotech, one of Baltimore’s largest sectors, will see a decrease in funding, per Conwell, since it relies heavily on federal grants cut by the Trump administration.
Bunner, of UpSurge, emphasized that deal type and stage also matter when analyzing the state of the local startup ecosystem.
He pointed to several recent Series A deals as signs the region still has a strong early-stage base. That’s important for long-term growth, he said, because each Series A sets up the possibility for future later series rounds.
“In a smaller market like Baltimore, it’s important to ask not just how much is being invested, but where those deals are happening,” Bunner said. “Are companies getting funded at every stage? That’s what shows whether the pipeline is healthy.”
