Every year, we offer a glimpse into the future of the startup landscape, making predictions about the trends and shifts that could define the coming year. While we’ve had our successes – and admitted our misses – here are five key trends we anticipate shaping the tech and startup world in the year ahead:
Will the M&A Market Rebound?
A sense of optimism surrounds the potential for a resurgence in mergers and acquisitions (M&A) activity, fueled by the upcoming change in federal government administration. Many believe existing regulations have stifled the M&A environment and hope for a shift. The slowdown in M&A deals involving venture capital (VC)-backed startups has directly impacted VCs’ ability to deliver returns to their Limited Partners (LPs), consequently affecting their capacity to raise new funds.
Venture capitalists are hopeful that changes at the Federal Trade Commission (FTC) and the Department of Justice (DOJ) will revitalize M&A activity, especially after an overly cautious regulatory approach dampened deals like Amazon’s planned acquisition of iRobot. While high-profile deals facing regulatory hurdles make headlines, several smaller deals have faltered due to increased cost, scrutiny, and perceived diminished value. Despite the inevitable shifts likely at regulatory agencies, concerns linger about the economic climate and the new administration’s stance on both tech and M&A.
Increased tariffs, as promised by the President-elect, could reignite inflation and drive up interest rates. Furthermore, while there is talk of deregulation, the President-elect has also voiced concerns about the influence of major tech companies. The nomination of Gail Slater, a frequent critic of Big Tech, to lead the Justice Department’s antitrust efforts may have introduced an element of uncertainty in Silicon Valley. Nevertheless, the hope remains that the M&A market, and with it the IPO pipeline, will gain momentum, revitalizing liquidity from previous investments.
— Chris Metinko
IPOs: Will 2025 Be the Year of Return?
Following a slow year for new tech listings, expectations are that the IPO markets will pick up in 2025. In contrast to the cautious outlook of a year prior, the atmosphere has seen a shift. “I think there’s a lot of confidence in the market. Stock markets are trading at all-time highs,” said Ran Ben-Tzur from Fenwick & West, a legal advisory firm, explaining that, “there’s been a rotation back to focusing on growth, which obviously is great for tech.”
Two prominent companies have already filed: Klarna, a Swedish “buy now, pay later” provider, has confidentially filed with the Securities and Exchange Commission (SEC), and Cerebras Systems, an AI chip company, filed in September. Nina Achadjian, a partner at Index Ventures, anticipates that, “We should see companies start to test the public markets in 2025 across sectors — fintech, cyber, AI, and SaaS, among others.” Ben-Tzur predicts early momentum in the year, with acceleration in the latter half: “We’ll start to see momentum in the beginning of the year, and really accelerate, as the year goes on,”
— Gené Teare
AI and Blockchain: A Potential Synergy?
AI funding remains robust, with over half of recent global venture funding being directed toward AI companies. Generative AI companies that develop models, such as xAI and Anthropic, are raising significant funds, while many applications and agentic AI also seem to have little trouble raising large rounds. For instance, Writer, a San Francisco-based creator of AI applications for applications and agents for workflows in healthcare, retail, and financial services, secured a $200 million Series C round, valuing the enterprise-focused generative AI platform at $1.9 billion.
Some experts see an intriguing intersection between AI and Web3, the latter’s previous major innovation. Specifically, there’s a discussion of the potential for blockchain to boost the AI economy, particularly with the growing number of startups developing AI agents. With blockchain’s inherent security, potentially accelerating the creation of AI-powered advancements as compared to Web 2.0, some investors see the potential for improvements in efficiency and lower costs. However, the fusion of blockchain and AI remains largely in its early stages, but one worth monitoring.
— Chris Metinko
The Lingering White-Collar Recession
During the 2021 unicorn boom, expansive hiring sprees were typical among heavily-funded startups. This fostered both high-paying opportunities and career mobility in areas like programming, marketing, and project management. However, as the market corrected beginning in 2022, companies reduced their workforces. For 2025, many anticipate continued challenges in securing well-paying jobs in many of these areas. Public companies and established startups will likely continue to focus on cost-cutting, avoiding the ambitious goals often pursued during more prosperous times.
One might see the continued funding and hiring in generative AI as an exception. However, the inverse side to this discussion is that these companies develop technologies potentially able to replace human labor in various white-collar sectors. Consequently, progress for generative AI companies could mean further challenges in other areas, and therefore caution is advised for those seeking white-collar jobs.
— Joanna Glasner
Space and Defense Tech on the Rise
The historical hesitancy of Silicon Valley concerning military tech development is steadily diminishing. By mid-November, defense tech startups, defined by those operating in the military, national security, and law enforcement sectors, had raised nearly $3 billion across 85 rounds, according to Crunchbase data. This represents a record for venture investment in this sector.
Several factors contribute to the tech industry’s increasing alignment with defense tech. Governments are striving to integrate the most advanced AI technology into their weapons and defense systems as numerous conflicts emerge from Ukraine to the Middle East. Tensions between the U.S. and China are likely to remain high under the incoming administration, especially concerning China’s ambitions in Taiwan. Government spending and friendlier relations between Silicon Valley and D.C., a strong focus on aerospace, and high-tech industrial sectors may lead to significant growth in defense tech. Fueled by the Ukraine-Russia conflict, Europe is also investing billions in defense tech research.
For 2025, it is predicted that venture investment in defense tech will continue to grow, supported by government spending and evolving relationships between Silicon Valley and Washington, D.C.
— Marlize van Romburgh
