Every year, the startup world eagerly anticipates what the future holds, and 2025 promises to be no different. While some predictions from the past have hit the mark, such as the delayed revival of IPOs, others have been spectacularly off, like the expectation that the fervor surrounding AI would cool down. With a healthy dose of skepticism and anticipation, here are five key trends to watch unfold in the coming year:
Will M&A Pick Up?
A prevailing optimism suggests a shift in the federal government could revitalize a slow M&A environment, often considered overly regulated. M&A dealmaking involving venture-backed startups has been sluggish in recent years — based on Crunchbase data — which has consequently affected venture capitalists’ ability to provide returns to their limited partners (LPs) and raise new funds. Many venture capitalists are hoping that a change in leadership at the Federal Trade Commission (FTC) and the U.S. Department of Justice will spur M&A activity, which stalled after years of an overzealous regulatory environment that reportedly quashed deals like Amazon‘s proposed $1.4 billion acquisition of iRobot.
While high-profile deals that become entangled in reviews make headlines, other, smaller deals have failed to materialize due to increased costs and perceived lack of value. Despite the inevitability of changes at the regulatory agencies, concerns linger about how friendly the economy and the new administration will be to both tech and M&A. Increased tariffs, as promised by former President-elect Donald Trump, could potentially trigger a resurgence in inflation rates, consequently increasing interest rates. Furthermore, while Trump has expressed interest in less regulation, he has also been critical of the power wielded by Big Tech. His nomination of Gail Slater—a frequent critic of Big Tech—to lead the Justice Department’s antitrust efforts has likely given Silicon Valley some pause.
Regardless, many remain hopeful that the M&A market, and with it the IPO pipeline, will recover, allowing liquidity from past investments to flow more freely.
Is 2025 the Year IPOs Return?
Following another slow year for tech listings in 2024, industry experts anticipate a pickup in the IPO market in 2025. One year ago, sentiment was not bullish. “I think there’s a lot of confidence in the market. Stock markets are trading at all-time highs,” stated Ran Ben-Tzur of the legal advisory firm Fenwick & West. “There’s been a rotation back to focusing on growth, which obviously is great for tech.”
Currently, two companies have filed: Klarna, a Sweden-based “buy now, pay later” service that has confidentially filed with the Securities and Exchange Commission (SEC), and Cerebras Systems, an AI chip company that filed in September. “We should see companies start to test the public markets in 2025 across sectors — fintech, cyber, AI, and SaaS, among others,” shared Nina Achadjian, a partner at Index Ventures, via email. Ben-Tzur, who observed early momentum in 2024 that later tapered off, predicted, “We’ll start to see momentum in the beginning of the year, and really accelerate, as the year goes on.”
AI and Blockchain: A Promising Combination?
AI funding continues to surge. Over half of last month’s $28 billion in global venture funding poured into companies in the AI sector, with companies in fields from robotics to marketing to healthcare securing investments. Generative AI companies that develop models, such as xAI and Anthropic, seem to raise substantial rounds with relative ease, and many applications and agentic AI also have no problem securing significant funding.
However, some are looking to the intersection of technology’s current biggest development—AI—and its previous major shift: Web3. More precisely, what role could blockchain play in the development of the AI economy, especially considering the increasing number of AI agents being created by startups? Some investors see significant potential in the synergy between the two, particularly as blockchain and Web3 regain popularity due in part to the surge in cryptocurrency values. AI agents could potentially operate more rapidly on blockchain since security is already incorporated, unlike on current Web 2.0 platforms where security is added later. The efficiency could make AI even after and more dynamic and also more user-friendly and cost-effective for enterprises. It’s early days for the merging of blockchain and AI, but it is certainly a trend worth watching.
A White-Collar Recession Will Persist
During the height of the unicorn boom in 2021, well-funded startups were on a hiring spree. This allowed skilled workers to benefit from high-paying jobs and a certain degree of career mobility in areas such as programming, marketing, and project management. However, this prosperity didn’t endure. Things took a turn for the worse beginning in 2022, with many high-flying firms reducing staff and those who are still employed opting to remain in their current positions. It’s somewhat difficult to pinpoint where we are in the cycle presently, but anecdotally and per media reporting, it appears more difficult than usual to secure a well-paid job at a mature tech company or funded startup.
For 2025, the job market is predicted to remain challenging in numerous areas that were once highly sought after for tech hiring. Mature startups and public companies in particular will remain cautious about rising costs and will avoid the ambitious projects that many once pursued. One could argue that generative AI, where funding and hiring remain strong, is an exception. However, the counter-argument is that these are the very companies developing the technologies best-suited to supplant human labor in other white-collar industries. Consequently, what benefits these companies might not benefit the rest of us from a career perspective.
Space and Defense Tech Will Boom
The days when Silicon Valley was hesitant about working on military tech are clearly ending. By mid-November, defense tech startups—those operating in the military, national security, and law enforcement sectors—had already raised nearly $3 billion in 85 rounds, according to Crunchbase data. This represents a new record for venture investment in the sector, exceeding the $2.6 billion raised by such startups in all of 2022.
A combination of factors is contributing to the tech industry’s current embrace of defense tech. Governments are scrambling to integrate the most advanced AI technology into their weapons and defense systems as conflicts intensify from Ukraine to the Middle East. Rising tensions between the U.S. and China are expected to continue under the incoming Trump administration, especially when it comes to China’s aspirations with Taiwan.
There is also significant overlap among defense tech, aerospace, and industrial tech—sectors likely to receive strong support from the White House and allies such as SpaceX CEO Elon Musk. The Pentagon’s 2025 budget request stands at $850 billion, with large allocations for unmanned systems and AI. Spurred by the Ukraine-Russia conflict, Europe is also investing billions in defense tech research, including AI-powered smart weapons, advanced drones, and improved radar technology.
For 2025, venture investment in defense tech is predicted to continue its growth, supported by government spending and friendlier relations between Silicon Valley and D.C.
