2025 Venture Outlook: Caution, Clarity & AI Conviction – Investors, LPs and Emerging Managers tuned in from all over the world to discuss the state of venture in the first half of 2025.
Here are the key insights from our Technology & Software Partner, Robert Dunn, at [VC Lab] Venture Flows 2025 Event.
Panelists:
Robert Dunn, Technology & Software Partner, H.I.Executive Consulting
Sarah Fu, Managing Partner, Elsa Capital
Joe Harkins, Investor; VP of Strategy at X2X Media Group
Ariel Eck, Managing Director, Segal Ventures
Moderator: Sam Huleatt, Capital Networks, VC Lab
This virtual roundtable brought together a diverse mix of venture capitalists, limited partners, and founders to share timely, unfiltered perspectives on today’s venture landscape. From shifting capital flows to recalibrated expectations, participants offered real-world insights into how the market is evolving – and where it’s headed. Designed for both emerging and experienced VCs, as well as LPs actively evaluating opportunities, the session delivered sharp observations from those navigating the front lines of investment and innovation.
Key Discussion Points
How would you characterize the state of venture in 2025?
There has been a recalibration of sorts. More discipline is being exercised in evaluating potential investments. Investors want to see more evidence of product traction in the market and clear evidence of customer satisfaction with the products being purchased and adopted. The expectations are much higher for a pathway to profitability and sustainable growth than a few years ago during the euphoria. The overall pace of investing is more thoughtful and less frenetic. In the area of AI, however, there is incredible exuberance and a fear of missing out. This requires disciplined enthusiasm and lots of diligence to enable discernment in perceiving signal from noise.
Capital Flows – Overview
Categories and themes that are attracting capital inflows: (I) AI-enabled enterprise SaaS (II) innovation in healthcare, such as personalized medicine, and improved diagnostics, (III) robotics / supply chain and manufacturing, (IV) FinTech – (i) particularly around risk mitigations and fraud protection, and (ii) FinTech / AI, (5) Defense tech
Are there particularly interesting areas where capital is flowing?
AI is attracting tremendous inflows of capital. What is particularly interesting is that AI is attracting large capital inflows at the Pre-Seed and Seed stage – much larger than we have typically seen startups in other sectors. Part of this is surely due to the ‘gold rush’ occurring in this area, but this is also due in part to the ability of AI companies – if they get product-market-fit – to grow at superlative rates. So, investors who would have historically stepped in at the Series A financing round are stepping in at the Seed stage and investing at Series A levels. Reinforcing this dynamic, many believe that the AI startups will be able to achieve growth and revenue numbers with much smaller development teams and operate with much greater capital efficiency.
How is the perception of risk changed? How are investors responding to a revised view of risk?
Emerging managers are facing the market (and policy) risks undauntedly. Later stage funds are operating more from a ‘wait and see’ perspective. Some are making fewer bets on what is believed to be more ‘certain’ endeavors. The ongoing lack of liquidity is also tamping down aggressive investment sentiments. Funds need to both secure more liquidity and see a clearer and more certain pathway to liquidity for contemplated investments. Many LPs are seeing less DPI than they expected when they invested in a fund, and less than they would like. For family offices investing in emerging managers or early-stage funds, the level of diligence has increased – they are seeking to secure a higher level of confidence in the expertise and capability of the managers of those funds before investing as an LP. In particular, family offices want to assure themselves that the managers will bring significant value add to the companies that they invest in beyond the borders of the capital itself.
Hear directly from multiple sides of the venture ecosystem, watch the full replay here: