Fundraising in 2025: what to expect

The venture capital (VC) landscape in recent years has felt like a Shakespearean drama—triumphs, tragedies, deceit, and redemption, with Europe playing a pivotal role in this wild ride.

If you’ve felt confused, frustrated, or even terrified by the twists and turns, you’re not alone. But as we look ahead to 2025, it’s clear that the game has changed dramatically. This article walks you through the chaos of the past few years and outlines the key trends that founders need to know as they navigate the VC terrain in the year ahead.

2021: the pinnacle of investing

2021 was a record-breaking year for venture capital in Europe and beyond. The UK alone attracted approximately €16 billion in VC investments, leading Europe in this surge. Globally, over $620 billion was poured into venture capital, with tech being the standout sector. Everyone seemed to become an investor, chasing European companies and Series A rounds. It was the year of excess—a perfect storm of FOMO, hype, and seemingly endless cash.

2022: the tech smackdown

And then, the crash. The NASDAQ plummeted by 47%, a staggering $400 billion was wiped out in just 12 months, and 16% of all unicorns lost their horns. Europe saw significant contraction in valuations, with median SaaS revenue multiples dropping from 18.6x to 5.4x. Layoffs surged across the industry as the dirty side of the VC gold rush came to light:

It was a reality check. Investors and founders alike were forced to reckon with the consequences of loose oversight and inflated expectations.

2023: the IPO crash

If 2022 was the year of recalibration, 2023 was the bloodbath. The IPO market, once the holy grail for late-stage startups, collapsed. Companies looking to go public faced brutal conditions. Valuations for late-stage funding plummeted, and pre-IPO rounds faced significant reductions in funding. This perfect storm led to:

For founders, this meant VC funds were ghosting or pulling back, unsure if they could even raise their next fund.

On average, the number of commitments for new VC funds fell by two-thirds. For founders, this translated to almost twice as many companies chasing the same dollar of investment—in other words, you needed to be the absolute best to stand out.

2024: signs of stabilization

By 2024, the European venture market started showing signs of life. Equity investments in Europe totalled €39.6 billion in the first half of the year, a decline of 28% YoY but with key bright spots.

Late-stage funding saw the biggest gains, as investors focused on established companies they believed could weather the storm. Europe even outpaced Asia in funding for the first time in a decade, signaling a regional shift in investor confidence.

Despite the rocky road of the past few years, 2025 is shaping up to be a year of opportunity.

Here’s why:

1. Markets are fully loaded with cash

Europe has seen over 300 new VC funds emerge, with €41.6 billion raised in 2022 alone. These funds are now fully operational and looking to deploy capital. Contrary to media doom-and-gloom, the data shows that there is no shortage of capital—only increased competition for it.

Global venture capital is also shifting focus toward high-growth sectors such as AI, healthcare, and climate tech. AI is poised to dominate the investment landscape, with billions being funneled into generative AI, deep learning, and data applications. Meanwhile, green technologies are seeing a surge in interest as investors align their portfolios with sustainability goals.

2. Late-stage strength

Investors are concentrating on late-stage funding, pouring €7.5 billion into 100 deals in 2024’s final quarter. These companies represent safer bets with proven growth trajectories, making them the prime targets for funding in 2025. The message is clear: if you’re early-stage, the competition is fierce; if you’re later-stage, there’s a solid chance of landing capital.

In 2025, VCs are expected to remain highly selective, backing later-stage companies that demonstrate resilience and scalability. Investors are particularly focused on startups with unique value propositions and those operating in high-demand sectors like AI, biotech, and sustainable energy.

3. IPO market reopening

The long-awaited reopening of the IPO market is expected to inject liquidity back into the system. When IPOs take off, the cash cycle restarts, with investors eager to back the next wave of promising startups.

As IPO activity picks up again, especially in tech and healthcare, venture capital firms are expected to benefit from a more vibrant exit market. This will likely result in increased investment in the most promising pre-IPO startups, particularly those in the AI and clean tech spaces.

4. Technological advancements

The rise of AI, deep tech, and climate tech is generating a wealth of investment opportunities. These sectors are expected to drive the next decade of innovation and growth. Founders in these spaces can expect heightened interest from VCs—provided they’re ready to explain their value in plain English (more on that below). VC funds are also increasingly backing healthcare innovation and digital health, as these areas continue to evolve with the help of AI and other emerging technologies.

5. Founder-led VC

Europe is witnessing a trend of entrepreneurs reinvesting into the ecosystem. These operator-led funds, often overlooked, are well worth seeking out. Think of them as the Robin Hoods of venture capital—minus the green tights. Entrepreneurial investors, particularly those with hands-on experience in scaling businesses, are expected to play a more prominent role in funding, driving innovation, and making more strategic investments in 2025.

If you’re planning to raise in 2025, here’s how to stack the odds in your favour:

1. Control the process: Fundraising is not about luck; it’s a structured process. You’re not just asking for money—you’re selling a limited number of shares in a high-growth business. Act like it. And no, looking desperate doesn’t count as a sales strategy.
2. Be concise and clear: Investors now spend just 2:30 minutes on a pitch deck on average. Your message needs to grab them immediately. What’s your one-line pitch?
3. Build relationships early: Don’t wait until you need money to talk to investors. Cultivate relationships long before you begin your raise. Think of it as networking without the awkward name tags.
4. Focus on active funds: Many new funds lack the established networks and hype of top-tier VCs. Seek out funds actively deploying capital, even if they’re under the radar.
5. Do your due diligence: Pay attention to term sheets. Watch for liquidation preferences, ratchets, option pools, and board seat demands. And for heaven’s sake, don’t sign anything you don’t fully understand.
6. Differentiate yourself: Investors are tired of “same but different.” Articulate why you’re truly unique and why your team can execute the vision. Experience matters—brag about it (but keep it charming).

The last four years have been a case study in extremes, from the exuberance of 2021 to the bloodbath of 2023 and the cautious optimism of 2024.

But 2025 holds promise for founders willing to adapt, prepare, and execute with precision. The cash is there—it’s up to you to claim it. So suit up, get your pitch straight, and remember: life’s a pitch—make yours unforgettable.