Editor’s note: This is part 2 of our 2025 Venture Investment Preview. Read part 1 here.
While much of the venture capital world enters 2025 with considerable optimism about the outlook for startups, buoyed by expectations for a potential upside in the IPO and M&A markets, other factors can also impact the funding environment. Highly sexual. These include deregulation in some hot startup areas (cryptocurrency!) and continued enthusiasm around artificial intelligence.
AI is still king
There’s debate about what President-elect Donald Trump’s second term means for the market, but one thing no one is debating is that AI will continue to dominate the VC world. That’s true.
AI startups have raised more than $87 billion in 2024 through early December, according to data from Crunchbase. This is already well above the 2023 total of less than $56 billion.
By all accounts, the pace of investment in AI is expected to continue in 2025 as the technology improves pain points such as workflow and coding.
Yash Patel, general partner at investment firm Titanium Ventures, also said agent AI could evolve, perhaps upending the SaaS model and becoming more outcome-based. One example is an AI-powered construction contracting platform that pays based on the number of contracts completed rather than a subscriber model.
There is potential for significant AI disruption in industries such as defense and environment/agtech, as well as data-heavy sectors such as healthcare.
Speaking of data, investors said they will continue to focus on companies like NetSuite and Salesforce 1. In other words, organizations with large amounts of data that AI needs to help in very specific industries. That data could make an already big company even bigger.
One thing is for sure: AI is not going anywhere.
“With the exception of AI, I think startup valuations are becoming more reasonable in many cases,” said Don Butler, managing director at Thomvest Ventures.
less regulation
When it comes to AI, venture investors and others said they believe it is one of several industries that will benefit from deregulation by the new administration.
Other sectors such as fintech and energy (which are closely related to AI given the amount of electricity the technology consumes) are also likely to see increased trading as regulations are eased or clarified.
And, clearly, the biggest winners are cryptocurrencies and blockchain.
After President Trump’s victory, Bitcoin exploded, surpassing $100,000.
Although it is unclear how far the market will expand, there is no doubt that Web3 will receive renewed attention.
“We’re going to see larger companies become more aggressive with Web3,” Patel says.
In December, President Trump appointed former PayPal executive David Sachs as czar of cryptocurrencies and artificial intelligence. Sachs has long ties to the VC industry, co-founder of Craft Ventures, and has been a critic of regulation in the past.
Of course, some industries may be losers from any change. Most say clean energy and electric vehicles are likely to suffer most under the new administration.
Nevertheless, venture capitalists, advisors and other industry players appear cautiously optimistic about what the new year will hold, while acknowledging there are always unknowns.
“The venture ecosystem will be in even better shape next year than it was in 2024,” Patel said.
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Illustration: Dom Guzman
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