What to Expect from Venture Capital in 2023: Insights from Leading Investors
The article discusses the predictions of several venture capitalists and startup experts on what will happen in 2025 in the world of startups and venture capital. Here are some key points:
Trends that will continue:
- The perceived short list of winners in the AI space will continue to command significant investor attention at premium valuations.
- VCs, especially seed stage, will struggle to raise new funds due to rough performing 2020 or 2021 vintages.
- There will be a continued trend of VC-backed companies shuttering as capital markets become more selective.
Trends that will end:
- The spray-and-pray investment approach will give way to greater diligence and meaningful value-add from investors.
- Consumer tech will start to make a comeback in 2025, reversing the trend of the last cycle which favored enterprise SaaS companies.
Unexpected events that could happen:
- Mergers or closures of big-name unicorns due to lack of growth or cash.
- A significant climate-related disaster, geopolitical conflict, or economic shock that fundamentally reshapes the startup and VC landscape.
- A surge in venture dollars looking at hard technology as software becomes commoditized due to generative AI.
- OpenAI converting to a for-profit entity for Microsoft to acquire it in the largest acquisition ever.
Key areas of focus:
- AI will continue to be a major area of focus, with investors prioritizing paths to profitability and sustainable business models.
- Hard technology, such as bio, tech, hardware, and other forms of deep tech, may become more prominent due to generative AI commoditizing software.
Overall, the predictions suggest that 2025 will be a year of increased scrutiny and selectivity in venture capital investments, with a focus on sustainable business models and paths to profitability.
