Overview of the 2025 Venture Capital Landscape
The WilmerHale 2025 Venture Capital Report offers a comprehensive review of the US venture capital (VC) market, providing insights into several key trends and recent developments.
VC Market Activity and Mega-Rounds
While overall venture capital activity remains below the 2021-2022 peak, 2024 showed a rebound with the fourth quarter marking the highest quarterly capital invested since early 2022. Notably, "mega-rounds" of $100 million or more staged a partial recovery in 2024, rising to 384 deals from 258 in 2023 but still below previous highs like 2021's 859 mega-rounds. California leads in mega-rounds followed by New York and Massachusetts, with technology and healthcare sectors dominating these large financings. Artificial Intelligence and Machine Learning-driven startups continue to represent a significant and growing portion of mega-rounds.
Non-Compete Laws
The report discusses the Federal Trade Commission’s (FTC) effort to standardize non-compete agreements nationally. This regulatory push aims to restrict overly broad or prolonged non-compete clauses that could hinder employee mobility and startup formation. Such changes may influence how emerging companies negotiate and structure hiring and retention agreements, fostering a more competitive and innovative startup ecosystem.
Convertible Notes and SAFE Terms
There is an observable trend in the terms of convertible notes and Simple Agreements for Future Equity (SAFEs), commonly used instruments in startup financing. The report analyzes recent shifts, likely referring to adjustments in valuation caps, discount rates, maturity terms, and investor protections, reflecting evolving market conditions and investor preferences.
VC-Backed Company M&A Deal Terms
Exit activity increased compared to 2023, with more venture-backed IPOs and mergers and acquisitions (M&A) transactions, though still below historical recent levels. The report examines deal terms in VC-backed company M&A, likely including changes in purchase price adjustments, earnouts, representations and warranties, and indemnification provisions—elements critical for aligning interests between founders, investors, and acquirers in a changing market environment.
State-wise Breakdown of Venture Financing Activity
The report includes a breakdown of venture financing activity by state, providing valuable insights into regional trends and investment patterns.
Subscription and Updates
Readers can subscribe to mailing lists for updates on the latest developments in these areas, and follow the WilmerHale Launch blog for insights on emerging companies, startups, and venture capital. For a deeper dive into M&A and IPO trends, the M&A Report and IPO Report are also available.
In conclusion, WilmerHale’s 2025 Venture Capital Report offers a nuanced view of the US venture capital landscape, capturing a recovery from the lower activity post-2022 peak with renewed large financing rounds, regulatory influences on workforce mobility through non-compete laws, evolving financing instrument terms, and a cautious but increasing pace of VC-backed exits. These insights are grounded in detailed legal and market analysis intended to inform investors, startups, and legal practitioners navigating the US venture capital ecosystem in 2025.
- With the rebound in 2024, venture capital investing experienced a surge in activity, particularly in large financing rounds, as mega-rounds of $100 million or more staged a partial recovery, reaching 384 deals.
- As investors and startups negotiate and structure hiring and retention agreements, changes in non-compete laws, such as those proposed by the Federal Trade Commission, could have a significant impact on the overall US venture capital market, potentially fostering a more competitive and innovative startup ecosystem.
