Welcome to our 2025 Crystal Ball series!

I’m thrilled to share here the first of four Crystal Ball installments for this year. As we round out 2024, we’re also looking into our collective future.

At least, what that collective future might look like. I have a complicated relationship with prediction, personally. I often think of that famous Winston Churchill line: “It is a mistake to try to look too far ahead. The chain of destiny can only be grasped one link at a time.”

That said, many of you are in the business of prediction. And I do think the first link is often expectation and planning. What do we believe is possible or likely? So, what steps do we then take to make it so?

I will say this. Sifting through hundreds of predictions, I was struck by an overwhelming sense of optimism. There seems to be a general belief (at least in my inbox) that 2025 holds a lot of promise for the private markets.

Without further ado, here’s where you think 2025 is taking us.

Note: Many answers have been edited for clarity and/or brevity.

Venture capital: Turning the corner

The VC world is set for a boom in 2025, aided by the incoming administration’s policies. —Ivan Nikkhoo, founder, Navigate Ventures

Securing new funding rounds is expected to remain slow, and exits will continue to lag. Startups must carefully manage their runway, as extension rounds may become more prevalent.

Companies will need to demonstrate real market traction and product-market fit to secure an A round, startups must prove their viability to receive additional insider support. —Jon Keidan, founder and managing partner, Torch Capital

The most notable shift in 2025 will be an increased concentration of capital among established firms. 2022 saw a record $184.2B raised across 1,500+ funds, while up to Q3 2024, only $65B was raised across 380 firms, with 81% flowing to established players. This trend suggests a “flight to quality” among limited partners. —Dominic Costanzo, VP of portfolio, 43North

Get ready for the greatest bull market ever—ZIRP is back, and things are about to get frothy and loud. Crypto will roar back to life, monkey pictures and all, while housing prices skyrocket and IPOs flood the market. Seed rounds will flow like it’s 2021 all over again, with more money chasing the next big thing than ever before. It’ll be a wild ride, but let’s hope we’ve learned something from the last bubble—because it’s shaping up to be déjà vu. —Siqi Chen, founder and CEO, Runway

It could very well be that the venture market in 2024 marked the bottom of a cyclical contraction. While startup funding stabilized, capital commitments into venture funds declined from 2023 levels, with emerging managers (Funds I – III) and newly established (Funds IV – VII) bearing the brunt…I predict 2025 will hinge on the reopening of exit markets. —Beezer Clarkson, partner, Sapphire Partners

2025 will be a year where VCs will be focused on testing and reacting to public market receptivity to various types of companies trying to IPO. Once the pattern events for a successful offering, expect the floodgates to open! —Aziz Gilani, general partner, Mercury Fund

We expect fundraising, which has historically lagged a broader market rebound, will increase and accelerate into the second half of 2025 as GPs burn through the dry powder they accumulated in 2021 and 2022. —Scott Voss, managing director, HarbourVest.

While venture capital deal activity in later stages has slowed, we anticipate a resurgence in growth-stage investments for more mature companies. This shift will likely be driven by the reopening of IPO markets in 2025, alongside an uptick in M&A activity, creating attractive opportunities for investors at these stages. —Thomas Molleker, associate, BMW i Ventures

We might see new and returning LPs infuse capital back into venture. While many LPs are over-allocated in the asset class and others shifted their strategy away from VC to pursue quicker liquidity options, we’re starting to see a new crop of LPs bet on venture. This could lead to stronger fundraising numbers in 2025 and help distinguish breakout companies from others in the pack. —Sydney Thomas, founder, Symphonic Capital

We will see a flood of venture dollars into technology for re-catalyzing the U.S. industrial base and modernizing our defense capabilities. This will be driven by shifting geopolitical tides, growth in government demand for asymmetric tech and more generalist investors jumping in. Expect a record-breaking wave of deals and dollars flowing into AI, automation, cybersecurity, quantum and other strategic tech for the manufacturing, supply chain and defense sectors. —Aaron Jacobson, partner, NEA

2025 will be a mad dash to exits. LP thirst for liquidity will push funds to sell; the ticking clock of expiring investment periods will catalyze firms to buy. —David Fann, partner, senior managing director, and head of investor relations, VSS Capital Partners

Private equity: Tailwinds

Lower interest rates will make it possible for private equity firms to more easily afford the leverage needed to acquire companies and thus kick-start a PE-backed buying cycle. —Don Butler, managing director, Thomvest Ventures

Institutional investors may need to ‘scooch’ over a little more in 2025 to accommodate individual investors, who will increasingly access the private market through new pathways that continue to expand. —Andrea Auerbach, global head of private investments, Cambridge Associates

We expect to see robust activity among the Private Equity community in 2025. A combination of significant dry powder, longer holds on assets, and a need for DPI (distributed to paid-in capital) should lead to increased M&A volume. —Zeeshan Memon, head of financial sponsors group, Stifel

Private equity will play a key role in creatively providing capital for the major investments needed in traditional, renewable, and nuclear energy. —John Grand, partner of M&A and private equity, Vinson & Elkins

We expect the consumer sector to continue to dominate private equity. It’s a huge part of our economy, representing 70% GDP in the U.S. —Jamie O’Hara, president, TSG Consumer Partners

Private equity is positioned for a pivotal year in 2025, as the new administration’s vision for America is one of faster growth, lower taxes, and less regulation that will boost deal-making and fundraising. Lower inflation and a Federal Reserve that is firmly into an easing cycle should also lower the industry’s cost of capital, creating an environment for greater capital markets activity. —Gunnar Overstrom, partner, Corsair Capital

Startups: The basics still matter

2025 will be the year in which serious companies driving hefty customer ROI separate from the competitive herd and continue raising at even more compelling valuations while fluff and hype (i.e. most of AI) begins to sputter and decelerate. —Rob Biederman, managing partner, Asymmetric Capital Partners

Being a bootstrapped startup is going to be a badge of honor. —Martha Bitar, cofounder and CEO, Flodesk

Unlike their zombie startup counterparts, vampire startups are now awakening from a post-2021 ‘slumber’ having used the time to drive efficiencies alongside growth (perhaps by embedding AI in their offerings). These ‘vampires’ (like Dialpad and Airwallex) are solid assets flying under the radar. —Larry Aschebrook, founder and managing partner, G Squared

The one-person $1 billion company is coming. The number of solopreneurs building physical products will explode as the tools to design, manufacture and sell are made increasingly simple with AI. —Annie Kadavy, managing partner, Redpoint Ventures

In 2025, tech startups shift back towards a focus on growth, with an important qualification. Over the past years, we’ve seen the pendulum swing dramatically in the startup world. Growth-at-all-costs was once the dominant paradigm, with companies raising huge rounds and spending them almost as quickly. That gave way to an intense focus on efficiency as interest rates rose and capital grew more constrained. Companies shed workforce, tightened their belts and looked for ways to minimize spending. We’re finally at a stage now where the pendulum is swinging back toward a healthy middle ground. With interest rates declining, startups will again prioritize growth—but with a refined focus on growing quickly without giving up efficiency. The reality is, startups are fundamentally growth engines. If they don’t grow, they sputter out. In 2025, I think the startup landscape will again shift into high gear. —Jyoti Bansal, CEO and cofounder, Harness and Traceable

Secondaries: Busy, and getting busier

The secondary market saw record volume in the first half of 2024. As we near the end of the year, based on what we are seeing, this trend has not only continued but accelerated. Back in 2019, we predicted that the secondary market would break $200 billion in 2025—that was met with a lot of skepticism, but we still believe we are on track. —Yann Robard, Managing Partner, Dawson Partners

While we predict that secondary funds for private wealth will become increasingly popular in 2025, we also think that structural and portfolio differences among the funds available will start to impact investor receptivity. —Ryan Levitt, head of Americas, LP secondaries, ICG

Momentum in secondary deal volume is expected to continue as the use of secondary market solutions by LPs and GPs is now common practice. GP-led capital solutions (continuation vehicles in particular) have proven to be highly effective, and all signals suggest this will continue in 2025.” —Eric Deyle, co-head of Eaton Partners, a Stifel company

In Q3 2024, M&A activity hit a two-year high, with 170 companies acquired on Carta. That’s the fourth consecutive quarter of rising M&A exits. Meanwhile, secondary transactions are changing how startup stakeholders access value. SpaceX—now the most valuable private company in history—and OpenAI have led the way with tender offers. Carta data shows tenders are trending up: 22 were facilitated in Q3, the highest since late 2021. If companies have the access to capital to stay private longer, it begs the question: What are the benefits of going public? The answer to that question might come in 2025. With liquidity options evolving and private capital flowing, the IPO market will reveal whether this is a fundamental shift in how startups exit—or just a temporary recalibration. —Peter Walker, head of insights, Carta

Macroeconomic and public markets outlook: Positivity and volatility

The public equity markets are near all-time highs. This opens up M&A opportunities as publicly traded companies look for acquisition targets and may enable would-be entrepreneurs, who are now a little richer in stock, to pursue the startup business ideas they have been thinking about for a while. —Jeffrey Berman, general partner, Camber Creek

As much as everyone is expecting roaring public markets, there will be volatility throughout the year as the new political parties test out some muscle, even if we end directionally upward, it won’t be a smooth ride. —Pegah Ebrahimi, founder and managing Partner, FPV Ventures

The Goldilocks economy will reverse course. 2025 will see U.S. GDP slow due to DOGE’s impact on government spending and inflation will reaccelerate due to a lack of address supply constraints in the U.S. economy combined with stricter trade agreements. S&P declines 15% and NASDAQ declines 20%. —Andrew Albert, managing partner, Channel Equity Partners

With the Fed cutting rates, the U.S. stock market at all-time highs, and the economy still healthy, could we be looking at a new inflationary regime with 3% being the new 2%? —Dan Taylor, CIO, Man Numeric

Miscellaneous: Creators, Sports, Star Trek, and more

Moore’s law is not dead, it is merely resting. —Peter Barrett, general partner and cofounder, Playground Global

Star Trek’s universal language translator and Tricorder medical devices finally ship. —Joff Redfern, partner, Menlo Ventures

Many green technologies that were supposed to be hindered during the first Trump presidency were not impacted as expected. However, solutions that are heavily reliant on policy-related funding AND perceived to still be risky technologies are in for a world of hurt. —John Tough, managing partner, Energize Capital

Trump’s return to office is likely to bring proposals for caregiver tax credits aimed at easing childcare costs. But here’s the catch: Unless these credits are robust enough to offset skyrocketing expenses, they’ll feel like a drop in the bucket for most families and much like during the pandemic, we’ll see women exit full-time jobs in droves and the workforce will start to crumble under the pressure. —Lynn Perkins, cofounder and CEO, UrbanSitter

By 2030, the creator economy will be a primary employment sector for Gen Z. —JunKoo Kim, CEO and founder, WEBTOON

From a defense tech startup perspective, we’re optimistic that the Trump administration will bring needed change to the Department of Defense. Historically, it’s been too slow, too expensive and too difficult to sell technology to the Defense Department and with challenges this great, we can’t afford to be complacent. The Trump Administration has recruited heavily from the technology industry and has sought out high quality leaders who understand our mission in deploying new technologies at scale. —Dan Wright, CEO and cofounder, Armada

Sports venues are poised to get a ‘Glow Up’—think Michelin-Star chefs and high-tech sensory experiences. 2025 will see a continued emphasis on premium spaces and experiences. —Michael Proman, managing director, Scrum Ventures

DEI investing principles live on with other naming conventions—like a focus on investing in proximate leaders (those who share one or more of their identities with the population they serve)—because it leads to more successful investments and greater impact. —Doug Galen, cofounder and CEO, Rippleworks

In 2025, I think we’ll see the first Grammy go to a song that was enabled primarily by AI. —Cameron Adams, cofounder and chief product officer, Canva

See you tomorrow,

Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
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Nina Ajemian curated the deals section of today’s newsletter. Subscribe here.

VENTURE DEALS

- AusperBio, a San Mateo, Calif.-based hepatitis B treatment developer, raised $73 million in Series B funding. HanKang Capital led the round and was joined by Sherpa Capital, CDH Investments, existing investors Qiming Venture Partners, InnoPinnacle Fund, YuanBio Venture Capital, and others.

PRIVATE EQUITY

- Butterfly Equity acquired The Duckhorn Portfolio, a Saint Helena, Calif.-based wine company, for approximately $1.95 billion in cash.

- Sixth Street agreed to acquire a majority stake in Lemon Pepper Holdings, the London-based franchisee of Wingstop in the UK and Ireland, for more than £400 million ($503 million), according to Bloomberg.

- Guardian Capital Partners acquired Team LINX, a Denver-based technology infrastructure services provider. Financial terms were not disclosed.

EXITS

- JSW Neo Energy acquired O2 Power, a Gurugram, India-based renewable energy company, from EQT and Temasek for $1.5 billion.

- CDP Equity and Trilantic Europe acquired an 83% stake in Diagram, an Emilia-Romagna, Italy-based agricultural technology provider, from Nextalia. Financial terms were not disclosed.

OTHER

- New Enterprise Associates and others agreed to acquire and take NeueHealth, a Minneapolis-based healthcare provider, private at an enterprise value of approximately $1.3 billion.

- CCC Intelligent Solutions agreed to acquire EvolutionIQ, a New York City-based disability and injury claims management AI guidance platform, for $730 million in stock and cash.

IPOS

- Ascentage Pharma, a Suzhou, China-based cancer, hepatitis B, and age-related diseases therapies developer, filed to go public on the Nasdaq. The company posted $124 million in sales for the year ending June 30, 2024. Edward Ming Guo and Takeda Pharmaceutical back the company.

The Crystal Ball: VCs, entrepreneurs, and tech executives on what lies ahead in 2025