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Editor’s note: This is Part 2 of our 2025 venture investing preview. Read Part 1 here.
While many in the venture investing world enter 2025 fairly optimistic about startup prospects — bolstered by anticipation of a potential upswing in the IPO and M&A markets — other factors are likely to affect the funding environment too. They include a decrease in regulation in some buzzy startup sectors (crypto!) and the continued fervor around artificial intelligence.
AI still king
Although there is some debate about what President-elect Donald Trump’s second term will mean for the market, one thing no one debates is that AI will continue to dominate the VC world.
By early December, AI-related startups had raised more than $87 billion in 2024, according to Crunchbase data. That already far surpasses 2023’s total of less than $56 billion.
By all accounts, the investment pace for AI is expected to continue in 2025 as the tech improves such pain points as workflows and coding.
Yash Patel, general partner at investment firm Titanium Ventures, said he also could see agentic AI advancing — possibly flipping the SaaS model around and becoming more outcome-based. An example would be an AI-enhanced construction contract platform that wouldn’t be a subscriber model, but rather paid according to how many contracts it could complete.
Industries such as defense and environment/agtech could see considerable disruption from AI, as well as data-heavy sectors like healthcare.
Speaking of data, investors said they will continue to watch companies like NetSuite and Salesforce 1 — organizations that have massive amounts of the data AI needs to be useful in very specific industries. That data could make those already big players even bigger.
One thing is certain, AI is not going anywhere.
“I think in a lot of cases you are seeing more reasonable valuations from startups — except for AI,” said Don Butler, managing director at Thomvest Ventures.
Less regulation
Speaking of AI, venture investors and others said they believe it is one of several industries that will benefit from less regulation by the new administration.
Other sectors, such as fintech and energy — closely related to AI considering how much power the technologies consume — also likely will see an uptick in deals since regulations will be loosened or made clear.
Then, obviously, there is the biggest winner — crypto and blockchain.
Bitcoin exploded after Trump’s win — topping $100,000.
While it is unclear how high the market can go, it undoubtedly will bring a renewed focus on Web3.
“You’ll see bigger companies get more engaged with Web3,” Patel said.
In December, Trump appointed former PayPal executive David Sacks to serve as crypto and artificial intelligence czar. Sacks has long ties to the VC industry, is a co-founder of Craft Ventures, and has been a critic of regulation in the past.
Of course, some industries also could be losers with all the changes. Most point to clean energy and electric vehicles as two most likely to suffer under the new administration.
Nevertheless, VCs, advisers and others in the industry seem cautiously optimistic about what the new year will hold — even while acknowledging there is always some unknown.
“The venture ecosystem will be in a better spot next year than in 2024,” Patel said.
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Illustration: Dom Guzman
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