What does this year hold for venture capital? We consulted several investors.

The beginning of a new year inevitably brings with it the hope for a better future, although in the world of venture capital, things are always uncertain. In the United States, the number of venture capital firms has considerably declined, as institutional investors, reluctant to take risks, are only investing in the most prominent companies in Silicon Valley. Currently, artificial intelligence is the only sector that seems to hold relevance, and this situation is expected to persist. However, with the start of the year, opportunities for change also arise. Several voices from the venture capital space shared their expectations for the coming year, addressing both positive and negative outlooks, as well as some possible unexpected twists. Below are summaries of their opinions.

Positive Outlooks:

1. Nekeshia Woods from Parkway Venture Capital highlights that the reduction in return expectations from wealthy individuals in fixed-income instruments will lead them to seek investments in private markets, with a projection of over $7 trillion allocated to these markets by 2033. Institutions are using venture capital as a differentiating approach to access the best opportunities.

2. Gabby Cazeau from Harlem Capital anticipates that the IPO market will fully open up, bringing much-needed liquidity and benefiting all players involved. She suggests that early-stage investment will reactivate, expecting that 2025 will mark the beginning of a new positive cycle.

3. Triin Linamagi from Sie Ventures mentions that the emergence of individual GPs and angel funds will drive greater investment in earlier-stage companies. She also forecasts that capital directed towards diverse founding teams will increase, particularly in sustainability and health.

4. Michael Basch from Atento Capital predicts a well-received increase in liquidity for limited partners, thanks to the opening of the IPO and M&A market. This will translate into an increase in new investment opportunities.

5. Austin Clements from Slauson & Co. emphasizes that the IPO markets will revitalize, easing liquidity increases for limited partners and allowing greater commitments to more venture capital funds.

Negative Outlooks:

1. Woods notes that 2025 will be a decisive year for AI startups selling to enterprises, as many are stalled in an "experimental" phase and may not progress towards a sustainable model.

2. Cazeau warns that despite the reactivation, startups that fail to establish themselves in the market will face an uncertain future.

3. Linamagi believes that significant M&A or IPO activity will not emerge until late 2025, given that limited partners are cautious in deploying capital.

4. Basch mentions that the declining number of unicorns may continue to rise as valuations adjust in a more demanding market.

5. Clements also predicts that limited partners will be more hesitant to commit resources to new fund managers, which could hinder more innovative strategies from securing funding.

Trends to Watch and Possible Changes:

Woods believes that there will continue to be a favorable investment focus, while Cazeau sees a trend towards small teams effectively scaling their revenues. Linamagi asserts that AI is not going away and will influence the venture capital ecosystem, while Basch anticipates that established companies will continue to dominate investor attention.

Among possible surprises for 2025, Cazeau mentions that we could see the merger or shutdown of some unicorns. Linamagi warns about the risk of climate disasters or geopolitical conflicts that could radically alter the landscape. Basch opines that there will be an increase in investment towards more solid technologies, and finally, Clements mentions that OpenAI could transform into a for-profit entity, facilitating its acquisition by Microsoft.