Big Ideas: Ventech Predictions for Startups and Venture Capital in 2025

2025 promises to be a transformative period for startups and the venture capital ecosystem, marked by strategic recalibration, market shifts, and evolving technological priorities. While Artificial Intelligence remains a central investment focus, the spotlight will shift toward specialized, “vertical” enterprise solutions — AI systems trained on proprietary, constrained datasets — ushering in an era of targeted, high-value applications.

Here’s a look at the pivotal trends and predictions shaping 2025:

AI, AI, AI…

1. From AI hype to practical applications:

The AI narrative will pivot toward real-world, practical business solutions. Startups must demonstrate AI’s ability to deliver outcomes previously unattainable — not just incremental productivity boosts. The era of Gen AI hype is over; investors will prioritize solutions with demonstrable, bottom-line impact.

‍      2. Evolution of AI: from LLMs to Large Multimodal ModelsFollowing the buzz around Large Language Models (LLMs), we anticipate accelerated advancements in AI from China, including new GPU manufacturers. Moreover, the focus will shift toward Large Multimodal Models (LMMs), integrating diverse data types (e.g., text, visuals, audio) for enhanced capabilities.

       3. Autonomous AI agents: redefining HR and customer successThe next wave of autonomous AI software agents will revolutionize customer-facing roles, particularly in customer success. These advancements will spark widespread discussions on HR requirements, workforce shifts, and union responses.

       4. Challenges in LLM-based AI: the cost factorStartups heavily reliant on LLMs face growing concerns around sustainability. While Gen AI remains transformative, its cost and profitability challenges will become more pronounced. Investors will scrutinize business models to ensure AI integration delivers real economic value.VCs will have their eyes locked on …

Flight to quality: precision over volume

1. VCs will demonstrate a sharp preference for high-quality investments at early and growth stages. The SaaS sector’s challenges in scaling beyond the €10M ARR threshold underscore the need for startups with clear profitability pathways and well-defined market fit. Companies that seamlessly integrate AI into fully digitized, vertical processes — where software rivals human labor — will be primed for rapid, scalable growth.

‍2. HealthTech and Energy: pillars of growthThe HealthTech sector is set for explosive growth, propelled by advancements in digital health, biotech, and AI-driven medical solutions. Concurrently, Europe’s energy sector will emerge as a critical hub for innovation, reflecting global imperatives around sustainability and renewable energy.

‍3. The rise of new entrepreneurial modelsA new generation of bold, repeat entrepreneurs will redefine startup categories that barely existed five years ago. These founders will prioritize rapid US expansion and purpose-driven innovation. Simultaneously, the groundwork for a machine-to-machine web will begin to emerge, moving beyond today’s human-centric digital infrastructure.

‍4. Operational Technology (OT) digitalizationFinally, a notable shift toward Operational Technology digitalization will drive efficiency, safety, and environmental improvements across industrial sectors, positioning OT as a key priority for innovation.

‍5. Challenges for Deep Tech and Climate TechDeep tech, climate, and defense startups will encounter fundraising hurdles at Series B and C stages, as VCs double down on companies showcasing tangible customer traction. That said, dual-use defense startups will see a resurgence across Europe, driven by shifting geopolitical priorities.

‍2025 will mark a fresh start for the VC industry.

• Reopening of exit opportunities: IPOs and M&A on the rise

After a prolonged lull, the US IPO market is poised to reopen, unlocking exit opportunities for European tech companies that have achieved robust international traction. Simultaneously, M&A will accelerate, fueled by public tech giants leveraging their high valuations to acquire innovative players.

• European market: cautious spending and VC consolidation

The European startup ecosystem will enter a phase of cautious spending, preparing for a new economic cycle in 2025. This prudent approach will likely drive increased VC consolidation, as firms navigate the changing investment landscape.

• European instability: a catalyst for capital reallocation

Economic and geopolitical uncertainties in Europe could trigger increased personal savings. This trend allows VC firms to attract untapped capital, redirecting it toward resilient, high-potential startups.

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‍Insights by Jean Bourcereau, Christian Claussen, Claire Houry, Tero Mennander, Audrey Soussan, Joel Udden, Stephan Wirries; edited by Yakun Wang