What are the dynamics that rule the current fundraising environment? The answer is different, depending on whom you ask. So we did the asking about raising money at L25…

Raising Money in 2025

We’re in a famously challenged funding environment. So what are best practices in landing venture funding, and what are VC’s looking for? We talk to both investors and startups for first-hand insight.

Speakers

Luca Sechi, Circumference Group
Jamie Lane, Progress Partners
Emily Steele, Hummingbirds
Peter Damato, PersistentID

Key Takeaways

• After the hangover from the Covid software boom, it has become a buyer’s market for startup equity.
• In other words, funding levels have declined, endowing leverage and favorable deal terms for investors.
• The good news is that, after 8 quarters of declines in aggregate venture funding, things are rebounding.
• On the other hand, most of that rebound is funds that are going to AI companies and startups.
• So outside of AI, most other companies seeking funding are mired in the same buyer’s market.
• Why is AI so favorable to investors? It goes beyond the technology’s hype and general excitement.
• For example, the average path to a $5 million run rate for AI startups has surpassed that of SaaS.
• And some outliers in AI (such as Cursor) are reaching $100 million in ARR in less than two years.
• Boiling it all down, AI startups are getting the deal terms they want… everyone else is singing for their dinner.
• Meanwhile, though valuations aren’t what they were in 2021, they still exceed pre-Covid averages.
• Measuring average valuations as a multiple of public companies, private companies are still around 3x.
• Other market dynamics today include a return to fundamentals and more emphasis on profitability.
• This contrasts the Covid boom years when top-line growth at all costs was the order of the day.
• For startups, this means it’s all about demonstrating discipline, fundamentals, and a path to profitability.
• Startups that were funded prior to the drought have an edge as they’re known quantities to existing investors.
• That said, they still have to demonstrate the right signals that investors are looking for in today’s environment