Reflections on 2024 and Predictions for 2025

As the new year dawns, it’s the perfect moment to step back from the daily pace of business and take stock of the broader dynamics shaping the venture capital and technology ecosystems. This blog explores key trends, challenges, and opportunities that defined 2024 and looks ahead to what investors and innovators can expect in 2025.

Resilience in the “New Normal”

The venture capital industry in 2024 demonstrated its hallmark resilience. Following the challenges of 2022 and 2023, modest growth in venture deployment signaled renewed founder confidence and an attractive environment for investing fresh capital. While legacy investments continue to face hurdles, reset valuations and investor-friendly terms have set the stage for compelling opportunities.

Unlike the V-shaped rebounds of other past cycles, this recovery has been more measured. Recognizing this, we maintained a steady investment pace through uncertain periods, avoiding reactive cutbacks. The accompanying chart underscores the value of consistency, tracking venture deployment from 2015 to today and showing the pandemic-era distortions gradually reverting to historical norms.

The aberrations of 2021—driven by aggressive fiscal and monetary policies—created a historic surge in venture capital activity. Yet, the industry’s ability to stabilize post-disruption reaffirms its adaptability. What’s described as a “New Normal” is, in essence, the market realigning with pre-pandemic trends—a testament to its ability to mean revert.

A Reset in Founder-Investor Dynamics

One silver lining of the recent market correction has been the recalibration of founder-investor dynamics. Scarcity of capital in 2023 and 2024 created an environment where terms favored investors, leading to reset valuations, enhanced governance rights, and a renewed emphasis on capital efficiency. This environment has fostered deeper alignment between investors and founding teams, with clearer paths to profitability now a shared priority.

Looking to 2025

As we turn to 2025, guarded optimism has returned. The incoming administration’s focus on reduced regulation, favorable tax policies, and a laissez-faire approach to crypto could unlock new avenues for innovation and growth. Additionally, the potential reopening of IPO and M&A markets is poised to offer critical liquidity pathways.

Notably, the Goldman Sachs IPO Issuance Barometer, at 137 (vs. a baseline of 100), signals the most favorable conditions for public offerings since 2021. Recent IPOs, like ServiceTitan’s $625 million raise at a now $9.6 billion market cap, demonstrate the appetite for well-positioned venture-backed businesses. Such exits could catalyze renewed momentum across the ecosystem, boosting confidence among investors and founders alike.

Private Markets: Shelter From the Storm

I like to draw the analogy comparing investment markets to the ocean. On the ocean’s surface, variables like wind and tide can quickly stir up storms and create incredible tumult. But deeper in the water column, an environment of greater calm and consistency prevails. Similarly, compared to the volatility of public markets, private investments provide relative stability. The long-term perspective afforded by this dynamic enables venture investors to focus on nurturing transformative ideas and supporting exceptional entrepreneurial talent independent of conditions “on the surface.”

The current technology landscape is brimming with opportunities, driven by what we believe is the early phase of an innovation supercycle. From advancements in AI to breakthroughs in life sciences, robotics, and sustainable energy, these innovations have the potential to redefine industries and reshape everyday life.

Closing Thoughts

As we navigate into 2025, humility remains essential. While the journey ahead holds uncertainties, it’s a privilege as venture capitalists to support bold founders and groundbreaking companies. By remaining steadfast in our investment discipline and aligned with long-term trends, we are excited about the potential to drive meaningful impact and generate extraordinary value for our investors in the years ahead.

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