AI, IPOs expected to boost venture funding activity in 2025
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After a lackluster couple of years for venture funding activity, observers say they expect conditions to improve next year in Indiana and nationwide.
In its 2025 U.S. Venture Capital Outlook report, released this week, data analytics firm PitchBook said its outlook for next year’s venture activity is “moderately positive.”
And Ting Gootee, the CEO of Indianapolis-based TechPoint, said she believes investors’ enthusiasm for artificial intelligence will help spur investment activity in Indiana tech companies.
Although percentages vary depending on which source you look at, a significant portion of the latest venture investments are going into artificial intelligence.
Tomasz Tunguz, general partner at San Francisco-based venture investment firm Theory Ventures, posted on LinkedIn last week his analysis that 46% of all venture dollars invested this year went into AI companies.
Citing that statistic, Gootee said that percentage seems accurate to her, based on recent venture investments made in Indiana companies.
“The venture investors recognize the market opportunities are real, the adoption interest is real, and they’re putting dollars where they believe the growth will come from,” Gootee said.
Although AI has generated huge buzz over the past few years, Gootee said it’s only been more recently that companies have come up with ways to monetize that technology.
TechPoint is a nonprofit initiative that works to strengthen the state’s tech industry and tracks venture investments into Indiana tech firms.
“I just got done talking to, probably, 50 of our board members, and one of the few questions I constantly asked everybody was, ‘Do you have AI features in your products and services, and when did that come about?’” Gootee said. “In the overwhelming majority the answer is yes, and most of them happened this year.”
Because such a significant amount of venture funding is going into AI firms, Gootee said, the Hoosier firms’ AI-powered offerings should help the companies attract investment.
In its 2025 venture outlook, which takes a wide-angle view of the venture landscape, PitchBook said it expects an increase in the number of venture-backed companies that go public next year.
Initial public offering activity is important because when a company goes public, its early investors have the chance to cash out on their investment, and they can then use that cash to make new investments.
“Without unicorn IPOs to provide windfalls of realized returns, the venture market has remained strained over the last few years,” the PitchBook report said.
To date, PitchBook said, seven venture-backed unicorns have had initial public offerings in 2024. In the venture world, a unicorn is a privately-held company with a valuation of at least $1 billion. The combined valuation of the seven unicorns to go public this year is about $26 billion, the PitchBook report said.
Looking ahead to 2025, PitchBook is forecasting 12 unicorns will go public. The report did not specify which 12 companies, but the report does include a list of 20 unicorns that have either filed IPO paperwork confidentially or are rumored to be going public next year, including IT companies Chime, Discord, CoreWeave and others.
“The venture market will feel some much-needed relief even if there are only a handful of unicorn IPOs next year,” the report said.