One of the things we’ve been thinking a lot about is AI’s existence within tech, specifically, deciphering what excitement will be sustained from what’s trending. Though products coming to market are rapidly evolving, the first quarter of 2025 continued to prove AI is not just a passing wave; it’s the foundation of what’s next. Agentic AI is of particular interest thus far this year as we shift away from model development and towards applications of AI integrating in everyday workflows. The speed of iteration is unlike anything we’ve seen before.

Despite the recent volatility in global markets, the rush of innovation is driving a feeling of optimism in venture opportunities, Google’s $32 billion acquisition of Wiz being the biggest splash in Q1. It’s truly an outstanding exit, notably the largest acquisition of a private company ever. As early stage investors, we’re encouraged by these acquisitions as they demonstrate a broader trend of substantial returns to those with early conviction. We’re doubling down on our investments in AI applications and infrastructure these days and are excited to continue investing in the space.

Alongside the rapid proliferation of AI-based applications, software vulnerabilities are becoming a growing concern, and as a response enterprises will have to invest heavily to protect themselves. The Wiz acquisition underscores that today’s innovation boom isn’t just about AI productivity, it’s also about defense. Because many AI vulnerabilities are unique to these systems, we’re keeping an eye on startups designing novel security solutions.

At the same time as AI innovation and adoption accelerates, the broader tech industry is navigating a correction. Layoffs continue, not just as a response to overhiring but as a sign of shifting priorities. Companies are optimizing for efficiency, cutting unnecessary costs, and leaning into automation. This recalibration is painful in the short term but necessary for long-term growth. Despite macro uncertainty, we believe it’s still a great time to back new ideas. Startup outcomes are most tied to great products built by great teams, and market pullbacks are often the best times to be making deals.

Our takeaway from Q1 2025: AI’s momentum isn’t slowing down. The real winners of this era will be the teams that figure out how to build products integrating AI into real-world workflows. Teams who are flexible in addressing needs for both enterprises and lean companies while being clever in creating moats either with product or distribution. There’s a lot of noise in the space, but the companies that execute well will define the next decade of software. At MGV, we’re committed to backing founders who are focused not on how they can fundraise with flashy AI features but on solving real-world problems—treating AI as a tool in their toolkit.

Portfolio founders in the Bay Area joined us for MGV Raceday, a thrilling time go-karting at the Sonoma Raceway! The competitive spirit was fantastic and only amplified by the rainy weather that day. Afterward, we went from battling a slick track to discussing entrepreneurial challenges over pizza and beer. We’re excited to continue with our founder community-building gatherings and have a few planned for the near future.

We also co-hosted another Venture Montage Dinner with our good friend Ann Kim (Stifel Bank) at La Connessa. We enjoyed pasta, wine, and swapping stories from how we closed recent deals to how we navigated parenting challenges. Truly a lovely evening!

As a reminder, team members Patrick, David and Marc are based in San Francisco and Lauren is in New York. Here’s some upcoming Q2 travel the team has planned. Keep a look out for events coming in the next few months!

• Marc will be at Super Venture in Berlin | June 2 - 4
• David will be in New York | June 2 - 6
• Full team will be in LA | June 16 - 18

Reach out to theresa@mgv.vc to schedule a face2face with Marc, or directly via LinkedIn to connect with David, Patrick or Lauren.