🔮 2025 VC Predictions

We are back for the new year with advice for founders on board control, the potential damage of a high valuation at Seed, and 2025 VC predictions.

Happy 2025! We hope you enjoyed the holidays and are having a great start to the year!

♟️ Startup Boards

In response to an X post by the former CEO of Bench about being ousted from the role three years ago, Alex Iskold, Founder and Partner at 2048 Ventures, wrote an article detailing how a founder can be removed as CEO of their own company. The key is the board of directors, which holds significant control and influence over the company. The article goes on to explore why/how this is the case and offers advice to founders on how to maintain control of their board.

“In summary, founders should obsess over board composition as much as they obsess over dilution.” — Alex Iskold

STV Take: Negotiating with investors is about more than just valuation. Assuming the valuation is market, other topics, like liquidation preferences and board structure, have real implications for founders in ways that can potentially be more detrimental than what investors value the company at. Alex’s article is an insightful reminder of the power of a board of directors and why negotiating its composition is critical to a founder’s success.

🚨 Beware the Valuation Trap

Mike MacCombie shared a LinkedIn post on why realistic valuations are crucial to him when he is evaluating a company for early-stage investment. He highlights key factors he considers, such as the ease with which a company can raise its next two rounds of funding and the time it will take to achieve 10x revenue growth. Given how rare extreme revenue growth is in the beginning, Mike sees a better path for companies that raise at a reasonable valuation at the Pre-seed and Seed, figure out how to grow quickly, and then leverage that growth to raise a strong Series A.

STV Take: This article serves as a good follow-up to the first, offering another example of how optimizing for a high valuation can lead to long-term harm. There was a brief moment in time—ahem, 2021—when it felt like everything would always be up and to the right. Unfortunately, though, that was a fleeting illusion. Eventually, reality sets in, and a company’s valuation must be grounded in fundamentals. This is why Seed investors are cautious about valuations. They understand that growth often takes longer than anticipated, and the higher the valuation at Seed, the steeper the revenue growth curve needed to secure the next round.

🔮 2025 VC Predictions

TechCrunch asked several VCs for their predictions for 2025. Unsurprisingly, many expect the IPO market to rebound, bringing much-needed liquidity to the ecosystem. Other topics discussed include the potential collapse or mergers of high-profile unicorns, roll-ups in oversaturated sectors, and 2025 being the year AI companies either make the leap—or fail to—from pilot projects to core enterprise software spend.

“Investors will continue to move away from looking at products using [the] ‘number of users’ as a key consideration and move toward booked revenues, client pipeline, and costs as key considerations prior to investing.” — Nekeshia Woods, Managing Partner at Parkway Venture Capital

STV Take: While it feels like there is more optimism for 2025 than we’ve seen in recent years, I don’t think that’s going to translate into the frenetic dealmaking we saw in 2021, even if a bunch of investors realize liquidity. In other words, I think the pace and benchmarks for companies to raise VC in 2025 will be very similar to 2024. 2021 and 2022 feel like yesterday and investors remain cautious, wary of repeating the same mistakes. Plus, as mentioned in the TechCrunch article, I don’t think we’ve fully reckoned with the aftermath of the exuberance during those years. There is likely more than another shoe (or unicorn) to drop.