The startup world is starting 2025 much more optimistic than the 12 months before. The renewed optimism is partly due to moderate growth in venture funding last 12 months, when investment in global startups finally exceeded pre-pandemic levels again.
But investors and entrepreneurs we talked to aren’t just optimistic about investing this 12 months — in addition they imagine the M&A and IPO markets will regain momentum. Let’s take a closer look.
The return of the IPO market
After the lethargy of 2024, the IPO market is expected to finally get up in 2025.
“I think there is a lot of confidence in the market. Stock markets are trading at all-time highs.” Ran Ben-Tzur legal advice office Fenwick and West said Gené Teare of Crunchbase News in late 2024. “There is a return to a focus on growth, which is obviously great for tech.”
Other industry insiders agree that more firms from the backlog of enormous, late-stage venture-backed startups may finally be heading for the exit.
“Building on success ServiceTitan IPO and several other companies in 2024 expect a wider opening of the IPO window in 2025.” Nina Achadjian — partner in Index ventures who led Index’s investment in ServiceTitan and serves on the software company’s board, told us via email.
“There is an incredible amount of unrealized value that can be unlocked by going public, and I expect that the small handful of venture-backed companies that hit IPO markets in 2024 will serve as leaders for private companies that might otherwise wait for” excellent “market conditions,” Achadjian said, adding that she expects IPOs in a number of sectors, from fintech to cybersecurity to artificial intelligence.
(The Crunchbase News team agrees and has provided our thoughts on 13 possible IPO candidates this 12 months.)
Mergers and acquisitions may take a hit
The IPO and M&A markets are closely intertwined, so it should not be too surprising that almost all people we spoke to also expect an uptick in dealmaking this 12 months. Their optimism is fueled by the belief that the recent White House administration will provide a regulatory environment more friendly to mergers and acquisitions.
Slow M&A and IPO markets in recent years have also hampered startup investment in general, as VCs are unable to deliver returns to their LP investors, which in turn struggles to raise recent funds on the scale of past years.
“Those who manage money on behalf of others have been struggling with tighter liquidity for many years, which has perverse effects across all markets as that liquidity becomes tomorrow’s liability in new funds,” he added. Ryan Hinklemanaging director at a New York start-up investment firm Insight partnershe told us in April.
“A commitment today is a payback in three to five years, it becomes a new commitment in three to five years. And so the cycle continues,” Hinkle said at the time. “That wheel stopped turning, or at least slowed down dramatically.”
Venture capitalists we spoke to at the end of the 12 months expressed hope that leadership would change Federal Trade Commission AND US Department of Justice will loosen the regulatory environment enough to encourage more startup acquisitions after deals like Amazonproposed to take over the company value $1.4 billion iRobot were waived by regulators in the Biden administration.
Venture investing to proceed the recovery
Greater liquidity in the market would also help firms raise recent funds for investment, which might lead to more investment in start-ups.
“History shows very clearly that when there is positive liquidity, more money goes into venture funds,” he added. Beezer Clarksonpartner in Sapphire Partners– he said in an interview last 12 months.
Other VCs we spoke to also expect venture spending to be quite high in 2025, driven by continued growth in AI investment. This follows a 12 months in which AI startups captured nearly a third of all venture capital globally, with the $42 billion raised by AI startups in the fourth quarter breaking quarterly records.
More cryptocurrencies, less immigration?
Speaking of less regulation, the cryptocurrency and blockchain sector is expected to be one of the foremost beneficiaries of the recent federal administration’s more laissez-faire approach.
Right after Trump’s election victory Bitcoin prices rose to over $100,000. They have since fallen barely, but are still twice as high as they were a 12 months ago – reflecting a renewed sentiment that Trump and his allies might be staunch supporters of cryptocurrencies.
This is expected to result in a renewed focus on Web3, Yash Patelgeneral partner in an investment company Titanium venturessaid senior reporter Chris Metinko late last 12 months.
“You’ll see larger companies become more involved in Web3,” he said.
However, not all solutions proposed by the recent administration could be helpful for the startup world. Donald TrumpThe EU’s proposed import tariffs could increase inflation again and due to this fact raise rates of interest even further.
Trump’s Republican allies did so, too they disagree on the way forward for legal, high-skill immigration and the H-1B visa program – key issues for Silicon Valley, which relies on hiring hundreds of foreign engineers to meet its demand for tech talent.
The president-elect’s views on regulation have also often been contradictory. While Trump talked about easing regulations, he and the vice president-elect JD Vance have been frequent and vocal critics of enormous tech firms equivalent to Google AND Meta. Trump too nominated Big Tech critic Gail Slater will moderate Department of Justiceantitrust efforts – signaling continued aggressive antitrust enforcement by the recent administration.