Conclusion

Looking ahead with optimism

While the challenges have not disappeared, there are several reasons for optimism across the US venture capital industry in 2025, building off some positive signals in 2024.
At a high level, the regulatory environment is likely to ease due to the new US administration.

With a more permissive administration, combined with large cash reserves of key technology companies, we could see more and larger scale M&A transactions, resulting in much needed liquidity for the industry. And if a few promising venture-backed unicorn IPOs find positive market reception, the exit floodgates could finally open.

Optimism:

According to PitchBook, 40% of US unicorns have been held in portfolios for at least nine years, and that group accounts for more than $1 trillion in value.

Fewer regulatory headwinds should lead to market tailwinds in key areas of technology, especially with David Sacks of Craft Ventures serving as the country’s AI and crypto czar. The ties between Silicon Valley and Washington, D.C. appear strong, with others such as Scott Kupor of Andreessen Horowitz in positions of leadership and influence.

AI will continue to attract talented founders and engineers, as well as capital from investors and allocators.

The population of AI developers is expected to grow from 2 million to 3 million by the end of 2025, surpassing the population of Silicon Valley.

If 2024 was the year of LLMs, 2025 will be the year of Vertical AI.

Karthik Ramakrishnan, Partner at IVP

Investors will focus on scalable, enduring AI solutions that have clear value propositions within specific but numerous industries, including biotech, construction, govtech, healthcare, home services, infrastructure, logistics, nuclear energy, and quantum computing. And we will see more AI agents being built to learn from and supplement human work across these industries and others.

The possiblities of AI continue to be further illuminated and reimagined. The recent news of DeepSeek's accomplishments, for example, was received with caution, acceptance, and excitement in short order – indicative of the pace of AI itself. Innovation in AI is moving fast and will continue to advance venture financings, valuations, exits, and performance in the foreseeable future.

As we look ahead to 2025, the US venture capital industry is poised for a resurgence, driven by regulatory shifts, increased M&A activity, and the continued evolution of AI, with transformative advancements reshaping industries and fueling new opportunities for innovation and growth.

Source: PitchBook