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Fundraising in 2025 will continue to be a topic of interest, according to VC Renata Quintini, co-founder of early-stage VC Renegade Partners. Some companies with strong potential in large and fast-growing markets will attract significant funding and support. However, other companies that need to establish solid and efficient businesses may face challenges in raising capital. This reflects the current tight fundraising environment for startups, influenced by higher interest rates.
In the past years, many startups that easily raised funds in 2021 faced difficulties and even failed in subsequent years. VCs focused heavily on funding AI companies in 2024, leaving other early-stage startups struggling to secure funding. Particularly, the fintech sector experienced significant challenges. As we enter 2025, startups with strong business fundamentals will have a better chance of attracting venture funding. This includes offering products or services at profitable price points to a substantial customer base.
Quality over quantity is emphasized by VC Corinne Riley from Greylock, who highlighted the importance of annual recurring revenue (ARR) and customer retention. Achieving a high ARR is valuable, but what matters more is the quality and loyalty of customers. Investors are interested in customers who remain engaged over time and consistently increase their spending with the startup.
Another key aspect emphasized by VCs is building a loyal customer base that can be sustained with additional capital. This involves creating unique value propositions that set the startup apart from competitors, ensuring customer retention and satisfaction. The example of Braintrust, a Greylock portfolio company specializing in AI app development, illustrates the significance of attracting influential customers to drive further growth and investment.
Looking ahead, the focus on customer quality and retention will continue to be crucial for startups, especially in the aftermath of the AI gold rush. VCs are cautious about one-time revenue and seek sustainable business models that can withstand market fluctuations. The evolving landscape of AI and related technologies requires startups to differentiate themselves through innovation and customer relationships to secure long-term success.
