Having done a deep dive into PitchBook’s H1 2025 VC Tech Survey, not to mention living and breathing the state of venture with my clients who are in market for capital, I wanted to share my thoughts about how investors appear to be recalibrating their approach to technology startups. They are not responding with panic, but rather making the adjustments necessary to strategically move forward.
The PitchBook report includes responses from 32 venture capital investors and offers a snapshot into just how the industry is shifting. Some of the key takeaways from this report are below.
The Potential Impact of Tariffs
Even though tariffs do not apply to software or services, which make up the vast majority of technology investing in Silicon Valley, it should come as no surprise that tariffs are expected to make at least some impact on investors, with 84% of respondents expecting mild to moderate impact. Additionally, 64% of those surveyed anticipate higher supply chain costs, with 50% preparing for slowed growth. The sector identified as having the greatest potential for impact is semiconductors and other hardware (think about lithography equipment, hardware, components and accessories).
A Shift in Dealmaking
Even with the current volatility, 53% of the investors surveyed indicated they are “actively hunting for deals.” That said, there are some caveats. 34% are looking at deals with greater scrutiny, 25% are pulling back on international investment, and 44% are taking a pause until there is more clarity. Interestingly, 63% of respondents see trade tensions spurring domestic investment in some strategic sectors, which could mean a possible “pivot toward tech sovereignty.” On the east coast, we hear about a huge push into defense and dual-use technologies. We don’t see so much of that on the west coast, at least so far.
AI Disruption
The majority of the investors surveyed (52%) believe fintech is the sector most likely to be disrupted by AI. That is a jump from 32% of respondents surveyed in the second half of 2024. They point to advances in automated underwriting and LLM-based copilots as driving this jump in confidence. Healthcare and enterprise tech were also identified as strong candidates for AI disruption as well. Cybersecurity is now dominated by AI-innovation.
AI Adoption and Regulation
Most of the respondents (45%) pointed to a lack of clear use cases as the main factor blocking broader adoption of AI. Other factors were workforce skill gaps, and the high costs associated with implementation. From what I see with my clients, the use case has to be adapted, implementation costs are high, and so the sales cycle is slow going.
On the regulatory front, the concerns surrounding regulations seem to be easing, dropping from 55% to 39%. We don’t see much likelihood for federal regulation, but individual states and municipalities are a wild card. Then there are other jurisdictions like the EU, China, India, and Brazil. Regulatory scrutiny needs a close eye.
The Evolving Outlook for Fundraising, Exits, and Stakes
In H2 2024, survey respondents had a more positive outlook for VC funding for tech startups, with 58% predicting a rise in investment. In 2025, that number has dropped to 38%, with another 28% of respondents expecting a moderate decline. Ownership stakes are also rising as 34% of those surveyed indicate taking larger stakes in funding rounds, a jump of 11% from H2 2024.
Exit projections are also shifting. Only 34% are still expecting moderate exit improvements, as compared to 70% of respondents in H2 2024. Additionally, 25% expect stagnation, and 28% are anticipating a decline.
Stretching Timelines
Over half (60%) of respondents are still planning to launch another fund within the next two years. However, there is a growing faction of investors that are extending that timeline to three or even five years, as well as those who are simply opting out entirely.
In looking at the data as a whole, PitchBook analysts say the industry is still actively seeking opportunity, but with more caution and some shifting timelines. Again, uncertain times call for agility, and the industry seems to be responding appropriately.
Download the full report from PitchBook here.
[View source.]
