While AI is lauded by some as the most important technological breakthrough since the economic revolution, enterprises — arguably the tech’s biggest potential customer base — have been slow to adopt AI.
While some investors predicted that 2024 can be the 12 months we’d begin to see more AI adoption by enterprises, that didn’t play out as budgets remained constrained and AI tech often remained within the “experimental” category.
Will that every one start to vary in 2025? Depends on who you ask.
TechCrunch talked to twenty enterprise capitalists who back startups seeking to sell to enterprises about their predictions for 2025. They told us what they anticipate regarding enterprise budgets, trends value following, and what it can take to lift a Series A in 2025, amongst other things. Here’s what they said.
SC Moatti, managing partner, Mighty Capital: I’m really looking into this theme — AI adoption hinges on higher data. As enterprises transition from AI experiments to large-scale deployment, the demand for high-quality data intensifies.
Aaron Jacobson, partner, NEA: Code agents for app development modernization are underhyped. Expect to see AI getting used to re-platform mainframe apps to the cloud and upgrade older codebases.
Molly Alter, partner, Northzone: A key focus of mine is on spaces that were historically untouchable by enterprise funds because their business models demanded high COGS or OpEx. We’re seeing AI automate a lot behind-the-scenes work that sectors like accounting services, or revenue cycle management, or white-glove legal services can now command software-like margins.
Marell Evans, founder and general partner, Exceptional Capital: Understanding trends in enterprise sales cycles — what’s the duration certain organizations are trialing tools for before making decisions about internal adoption? In addition, understanding different pricing models of AI (in relation to) traditional SaaS, consumption-based and/or outcome-based.
Mike Hayes, managing director, Insight Partners: An unappreciated metric and something that I feel will gain traction in 2025 is TTFV, or time-to-first-value. I see this as a proxy for ease-of-implementation, so faster TTFV solutions must have a much bigger advantage going into (the) recent 12 months.
What areas are you looking to speculate in?
Liran Grinberg, co-founder and managing partner, Team8: Enterprise resilience, whether in front of operational faults or malicious insider or outsider threats. The CrowdStrike software update incident demonstrated how fragile our digital world is, not only on account of cyberattackers but additionally just mistakes.
Jonathan Lehr, co-founder and general partner, Work-Bench: Data sovereignty as a service. Organizations are increasingly investing in data sovereignty solutions driven by regulatory requirements and geopolitical concerns. We are exploring startup opportunities that enable firms to take care of complete control over their data’s location, storage, processing, and governance while ensuring compliance with local regulatory frameworks.
Mark Rostick, vice chairman and senior managing director, Intel Capital: One area we’re is firms that give attention to task-specific models. While the foundational models are well established, I find models that excel at specific functions particularly intriguing, especially when combined with agents built on top of them. In addition, we’re closely monitoring the event of alternatives to transformers and any possible solutions to cut back the necessity for the large amount of computing capability now required to coach LLMs and use them in production.
Mike Hayes, managing director, Insight Partners: Enterprises have historically considered technology as either driving revenue or reducing cost, but that’s quickly changing in favor of technology that drives enterprise value while concurrently reducing business friction. I search for solutions that solve unique, orthogonal challenges for enterprises — areas where traditional solutions have fallen short; this includes vertical and persona-specific workflows reimagined with GenAI or agentic automation and security innovations that not only discover and alert, but additionally remediate.
Jason Mendel, enterprise investor, Battery Ventures: A number of interesting areas where I feel AI can add significant value, and which I’m enthusiastic about, include observability / incident response, IT service management, demand generation and sales engagement, offensive security, software development, and the SOC workflow.
Ed Sim, founder and general partner, Boldstart Ventures: We think in second order effects. So if we assume that in the longer term, meaning the subsequent two to 3 years, we could live in a world where each of us has dozens or tons of of agents doing work for us, we’d like to take into consideration the entire infrastructure that should be built to support these recent digital employees. Who’s going to offer the safety infra to offer access control? Who’s going to administer these? Is there a platform to administer disparate agents and secure them? What a few runtime system for Claude’s MCP, which appears like a dockerized, secure sandbox for agents to do work.
What technologies, sectors, firms, etc., are you finding interesting that aren’t AI?
Liran Grinberg, co-founder and managing partner, Team8: Quantum computing remains to be promising. Cybersecurity isn’t going anywhere as well, with attackers leveraging AI and an increased complexity in protecting our digital infrastructure.
Nina Achadjian, partner, Index Ventures: We’ve seen a resurgence in fintech, SaaS, and e-commerce, which were hot sectors that saw a slowdown within the last couple of years. Beyond that, we expect cyber and gaming to proceed to be interesting this 12 months, with cyber accelerating further because the IPO market opens up and regulations and disclosure rules around security increase.
Aaron Jacobson, partner, NEA: There is a ton of hype around securing AI, but the larger opportunity helps enterprises apply ”Cybersecurity 101” at scale in a way that doesn’t impede user productivity. Key areas of particular interest are enforcing least privilege access, maintaining a secure data posture, and stopping ransomware. I’m also excited to speculate in technology that facilitates multi-cloud deployments for enterprises.
Molly Alter, partner, Northzone: I’m really enthusiastic about firms addressing the general public sector. The fiscal environment for presidency contracting is flush; total federal agency contracts reached $774 billion in 2023. Technology adoption and modernization are key to driving the efficiencies that the brand new administration is committing to, and there’s a growing ecosystem of firms which might be tackling this head-on.
Andrew Ferguson, vice chairman, Databricks Ventures: We’re spending a major period of time with our system integrator partner ecosystem. These firms are doing the labor of helping enterprises take their data and AI strategies and switch them into real-world implementations.
Janelle Teng, vice chairman, Bessemer Venture Partners: We are moving beyond the trendy data stack. The data infrastructure landscape is undergoing a large transformation, fueled by various aspects, including the rise of lakehouse architecture and convergence toward specific open table format standards.
Raviraj Jain, partner, Lightspeed Venture Partners: Energy is a large sector to speculate in given increasing demand for energy for data centers and the challenges with grid failures across the country. We’ll see continued interest in nuclear — each fusion and fission.
When it involves AI, how are you determining that an organization has a moat?
Cathy Gao, partner, Sapphire Ventures: I give it some thought in a “5D framework”: design, data, domain expertise, distribution, and dynamism. Since early this 12 months, we at Sapphire have used this framework to guage firms constructing applications with AI.
SC Moatti, managing partner, Mighty Capital: An AI moat is built on proprietary data, cutting-edge algorithms, and scalable infrastructure, enabling unique and superior solutions.
Scott Beechuk, partner, Norwest Venture Partners: The deepest moats will probably be created by large proprietary datasets. The firms with the best long-term potential are those constructing their very own unique datasets to excel of their particular, verticalized channels — often by either training or fine-tuning their very own models.
Jonathan Lehr, co-founder and general partner, Work-Bench: As a pureplay seed fund, we’re focusing most of our energy in vertical AI opportunities tackling business-specific workflows that require deep domain expertise and where AI is especially an enabler of acquiring previously inaccessible (or highly expensive to amass) data and cleansing it in a way that may’ve taken tons of or 1000’s of man-hours.
Raviraj Jain, partner, Lightspeed Venture Partners: Question to ask is, As models change into higher, does this company get threatened or strengthened?
What does it take to lift a Series A as an enterprise startup in 2025?
Liran Grinberg, co-founder and managing partner, Team8: With a powerful founder-market fit, and an ambitious vision to construct a giant company, one can raise a solid $15 (million to) $25 million Series A round with only a couple of $100Ks in ARR.
Molly Alter, partner, Northzone: Successful Series A enterprise startups will show strong topline traction (>100% YoY) with low burn multiples; gone are the times of 2021 when it was all about growth in any respect costs. More importantly, these businesses will show a transparent long-term differentiation strategy that may set them other than the host of other offerings attempting to lift money and sell into the identical enterprise customer base.
Kirby Winfield, founding general partner, Ascend: Go from zero to $1 million in two quarters with an A-plus team in a large market with a differentiated solution having created overwhelming demand.
Andrew Ferguson, vice chairman, Databricks Ventures: If you’re constructing an AI-first product, an all-star technical team and early product market traction ($2 (million to) $5 million ARR) would be the Series A expectation. The time from product launch to $5 million ARR is materially faster within the AI era than it was in the normal SaaS era. I expect that the Series B bar will probably be much higher — and it stays to be seen if this early ARR is high-quality and sturdy.
Jonathan Lehr, co-founder and general partner, Work-Bench: We’re hearing from downstream peers that the bar is around $1.5 million with the flexibility to grow 3x from there sequentially to lift a stellar Series A.
Jason Mendel, enterprise investor, Battery Ventures: Repeatability. Startups which might be solving an actual pain point in a big market where there is obvious urgency from a buyer/user perspective ought to be well-positioned to lift a Series A in 2025.
Do you are expecting enterprises will increase their tech budgets for 2025? Will they decrease them?
Aaron Jacobson, partner, NEA: Within AI, we’ll see budget allocated away from “chatbots” to agents. Enterprises will move beyond the low-hanging fruit of “GPT wrappers” to deploy digital staff that may reason and take motion to make an actual business impact.
Scott Beechuk, partner, Norwest Venture Partners: Tech budgets across many industries will increase in 2025, driven by leaders’ desire to realize two goals — which can sometimes be at odds with one another. The first goal is consolidation. The second is increasing top-line growth and improving operational efficiency, each of that are achievable with AI-based software applications. Buyers will purchase startup solutions on this category despite their desire to consolidate.
Kathleen Estreich, partner, Pear VC: In 2024, we expected to see more enterprise adoption of AI. But that hasn’t panned out, primarily because we haven’t yet discovered use cases which might be tightly scoped enough and the tools to cut back hallucinations and validate outputs haven’t gotten robust enough. In 2025 I expect to see more enterprise adoption because the model providers extend their stack upward. Every enterprise will need an AI tech strategy. If you don’t adopt, you won’t sustain. This can even create plenty of false signals on the revenue side for AI startups as experimental budgets will probably be high, but true product-market fit will probably be harder to see at first glance.
Kirby Winfield, founding general partner, Ascend: Enterprises will increase AI budgets in 2025. The query isn’t whether or not they’ll invest but how they’ll tackle pricing, testing, and data security. Companies like Salesforce and Smartsheet have already committed to AI adoption and can push harder to leverage their data assets to remain competitive.
Susan Liu, partner, Uncork Capital: Probably the identical for the primary half, after which because the economy improves and revenue/profits improve, we’ll see a rise in tech budgets within the second half.
Mike Hayes, managing director, Insight Partners: Based on what I’m hearing from our enterprise partners, they’re prone to marginally increase their tech budgets in 2025, with a give attention to areas that deliver measurable ROI and clear KPIs. I expect pressure from boards and CXOs to place AI use cases into production to extend and receive discretionary budget. I also expect continued enterprise investment in cybersecurity and cloud optimization. Said otherwise, the proper emerging technologies shouldn’t have trouble landing on account of tech budgets.
Jason Mendel, enterprise investor, Battery Ventures: I’m optimistic about 2025 and expect to see firms increase their IT budgets with a powerful give attention to emerging technologies. Heading into the 2025 budgeting season, we at Battery Ventures polled 100 CXOs, collectively representing over $35 billion in annual technology spend, and 74% of them expected to extend their technology spend in 2025.
Will there be more AI adoption?
Paul Drews, managing partner, Salesforce Ventures: Yes, essentially all enterprise workflows could be optimized with AI — especially agentic AI. We’re seeing real demand for AI and ML tools that could make underlying models 50% more efficient while delivering improved results. AI is experiencing froth, but from a bigger market perspective (not only Silicon Valley), AI remains to be recent and everyone seems to be attempting to determine the way to use it, price it, and buy it.
Mark Rostick, vice chairman and senior managing director, Intel Capital: For the moment, it’s clearly easier to adopt AI through application vendors than attempting to construct your personal platform on condition that the marketplace for enterprise platform tools remains to be very, very fragmented. I do think there’s pent-up demand for some kind of platform solution, so I imagine we’ll see many founders trying to deal with that problem this coming 12 months.
Raviraj Jain, partner, Lightspeed Venture Partners: It’s a consensus view but AI adoption will proceed to speed up in 2025 as (1) model capabilities improve, (2) enabling infrastructure is built out, and (3) stronger AI-first products come to market.
What sorts of firms in your portfolio are seeing the strongest growth? Do you are expecting that may change in 2025?
Marell Evans, founder and general partner, Exceptional Capital: Urgent pain points for AI-ready customers are producing shorter enterprise sales and procurement cycles and due to this fact faster traction and scale. As we see AI adoption more broadly, we might even see enterprises can have greater appetite to try not only solving for the urgent problems but additionally planning ahead to take care of competitive edge with “nice to have” or more future-forward and strategic solutions.
Kathleen Estreich, partner, Pear VC: We are seeing great traction in vertical agents with a transparent understanding of the unique needs of their customers. I feel vertical SaaS is a large opportunity in 2025 to own the end-to-end workflows with custom-built agents for the tasks to be done.
Janelle Teng, vice chairman, Bessemer Venture Partners: Many of Bessemer’s AI defense tech firms experienced tremendous growth this 12 months. One of our observations earlier within the 12 months is that the defense community just isn’t sitting idly by because the AI revolution sweeps the buyer and industrial industries by storm. The (Department of Defense) mapped and released its formal AI adoption strategy last 12 months, and we predicted that advancements and applications of ML will probably be embraced as essential for the national agenda and the defense community’s day-to-day work. This prediction proved prescient because the 12 months continued.
Mark Rostick, vice chairman and senior managing director, Intel Capital: Another strong segment of the portfolio focuses on the infrastructure layer of software and services firms. Anyscale is a incredible example. With their software, developers can construct, run, and scale AI applications immediately. There’s also RunPod, a virtual cloud service provider (CSP) for inference. It can bridge the gap between hardware and software stacks, which allows for seamless operation across various server providers, addressing a current challenge within the AI space.
Ed Sim, founder and general partner, Boldstart Ventures: No. This is considered one of the best platform shifts I’ve seen in 29 years of being a enterprise capitalist and IMO this can only speed up.
What are your predictions for the exit environment next 12 months?
Cathy Gao, partner, Sapphire Ventures: I predict M&A activity will increase as large firms seek to amass AI expertise. Strategic acquirers will give attention to startups with domain-specific AI capabilities or high data moats. The IPO market will remain cautious, but high-growth firms with profitability metrics might test the waters.
Nina Achadjian, partner, Index Ventures: I anticipate more liquidity in 2025, each for M&As and the general public markets.
Aaron Jacobson, partner, NEA: With the change of administration, I expect the return of mega M&A deals. We are going to see a multi-billion and even decacorn M&A consequence for a number one AI company.
Marell Evans, founder and general partner, Exceptional Capital: We expect exits to choose up barely next 12 months, possibly more acquisitions and IPOs. Although, given the newest fed meeting, exit volume is likely to be slower than we expected.
Kirby Winfield, founding general partner, Ascend: I predict recent FTC leadership under the incoming administration will make hyperscalers more acquisition-friendly for tech and talent. But the IPO market will likely remain sluggish, given the frothy valuations some firms can command from the private market.
Andrew Ferguson, vice chairman, Databricks Ventures: 2025 may finally be the 12 months that we see an uptick in tech M&A activity, as more favorable macro and (potentially) less onerous regulatory oversight make larger firms less skittish about M&A. Most strategic M&A will probably be focused around amazing technical founders and technology, fairly than on scaled business, especially ones that matured through the ZIRP era where the expansion/profitability metrics should still not pencil out for strategic acquirers. It’s possible that personal equity or growth equity investors make a play to consolidate that class of assets into broader platforms.
Paul Drews, managing partner, Salesforce Ventures: The likely emphasis on government efficiency and lower regulation will spur growth, investments, and exits. The public markets are soaring, but there continues to be hesitation across the IPO process from a non-public company perspective. We’ve seen glimmers of hope within the IPO markets, which pre-IPO businesses should take as a superb sign, but there remains to be some disconnect between the last private valuation and where the general public market will price businesses.
Mike Hayes, managing director, Insight Partners: I feel enterprises will look to strengthen their inorganic growth through acquisition more in 2025 than in 2024. As far because the IPO market, I do think that enterprises specializing in mission-critical solutions with predictable revenue can have opportunities in 2025. I’m optimistic and energized for 2025.
