Venture Capital Intelligence Report
December 25, 2025 • Synthesizing insights from top-tier VCs
VCs are selectively bullish on AI infrastructure and enterprise applications, but increasingly cautious about consumer AI and late-stage valuations. Focus has shifted from generative AI experiments to profitable AI-first businesses.
Series A and B remain competitive for quality deals, but Series C+ rounds face significant valuation pressure. VCs demand clear path to profitability within 18-24 months.
Down rounds increasing in late-stage, early-stage premiums persist for AI infrastructure. Public market multiples creating ceiling pressure on private valuations.
Building the picks and shovels for AI transformation - from model serving infrastructure to AI development platforms
AI-native software targeting specific industries with deep workflow integration and measurable ROI
Physical infrastructure for energy transition - from grid modernization to carbon capture scale-up
Zero-trust architecture and AI-powered threat detection as attack surfaces expand with cloud and AI adoption
Tools for modern software development lifecycle, especially around AI/ML workflows and cloud-native development
Defense tech and critical infrastructure represent massive untapped markets with strong regulatory moats
Most AI companies will fail to generate returns commensurate with their valuations without strong moats
Developer tools that increase productivity by 10x+ will capture enormous value
Enterprise software will be rebuilt from the ground up with AI-first architectures
Climate solutions need to be economically superior, not just environmentally friendly
Autonomous AI agents that handle complex, multi-step business workflows end-to-end
LLM reasoning capabilities crossed threshold for reliable business-critical tasks
$500B+ market for business process automation
Early signals from: Greylock, Index Ventures, General Catalyst
Companies to watch: Decagon, Sierra, Lindy
Commercial technology companies building dual-use products for defense and civilian markets
Geopolitical tensions + Pentagon recognition of commercial tech superiority
$100B+ annual defense tech market
Early signals from: Founders Fund, a16z, 8VC
Companies to watch: Anduril, Palantir, SpaceX
Applications that combine multiple AI models and traditional software for better performance
Single large models hitting performance plateaus, need for specialization
$200B+ market for AI orchestration platforms
Early signals from: Kleiner Perkins, NEA, Bessemer
Companies to watch: Databricks, LangChain, Weights & Biases
Using engineered biology to manufacture everything from materials to medicines
DNA synthesis costs plummeting, computational biology breakthroughs
$3T+ addressable manufacturing market
Early signals from: Flagship Pioneering, DCVC, Lux Capital
Companies to watch: Ginkgo Bioworks, Zymergen, Modern Meadow
Previous: Hot in 2021-2022 with creator economy boom → Now: Significantly cooled
User acquisition costs skyrocketed, platform risk from iOS changes, limited monetization paths
What Changed: Shift from growth-at-all-costs to sustainable unit economics
VCs Cautious: Sequoia, a16z, Greylock
Previous: Extremely hot through mid-2024 → Now: Cooling rapidly
OpenAI and Anthropic dominance clear, most applications lack defensibility
What Changed: Realization that wrapper companies have limited moats
VCs Cautious: Most tier-1 VCs
Previous: Pandemic darling through 2021 → Now: Cold
CAC/LTV economics broken, return to physical retail, market oversaturation
What Changed: iOS 14.5 privacy changes destroyed performance marketing arbitrage
VCs Cautious: Forerunner, Bessemer, General Catalyst
Build AI-native products, don't just add AI features to existing software
💡 Design your UX around AI capabilities from day one, not as an add-on
— Sequoia Capital
CFOs are now the ultimate decision makers for software purchases, not CTOs
💡 Lead with ROI metrics and cost savings, not technical capabilities
— Bessemer Venture Partners
AI engineers are the new full-stack developers - hire for adaptability over narrow expertise
💡 Focus on engineers who can work across the AI stack, not just model training
— Greylock Partners
Show a clear path to profitability by Series B or risk being unfundable
💡 Build unit economics models from day one, not growth-first metrics
— Lightspeed Venture Partners
Product-led growth works for dev tools, but enterprise needs human-led sales
💡 Don't rely solely on PLG for enterprise deals over $50K ACV
— Accel Partners
Deal volume down 40% YoY but average deal size up 25% as VCs focus on quality over quantity. Series A competition remains intense for AI infrastructure companies.
Series C • Lead: Amazon • Others: Google, Spark Capital
Validates massive capital requirements for frontier AI development
AI Foundation ModelsGrowth • Lead: Sequoia Capital • Others: Thrive Capital, General Catalyst
Shows continued appetite for proven fintech platforms with global reach
Fintech InfrastructureSeries C • Lead: Thrive Capital • Others: Microsoft, Khosla Ventures
Maintains position as leading AI lab despite competition
AI Foundation ModelsIPO • Key investors: Andreessen Horowitz, NEA, Lightspeed
Data infrastructure companies can achieve massive scale in AI era
Acquisition • Key investors: Greylock, Kleiner Perkins, Index
Developer-loved products command premium valuations even in tough markets
AI regulation will stifle innovation and benefit incumbents
Most VCs support some form of AI safety regulation
Reasoning: Regulation always creates barriers to entry that favor large companies
Their Bet: Backing AI companies building in regulatory arbitrage jurisdictions
Remote work is dead and companies must return to in-person
Many VCs still bullish on distributed work tools
Reasoning: Innovation requires in-person collaboration and serendipitous encounters
Their Bet: Only investing in companies with strong in-person cultures
Climate tech will generate better returns than AI
AI seen as biggest opportunity of the decade
Reasoning: Climate has larger TAM and less competition from tech giants
Their Bet: Allocating 50% of new fund to climate infrastructure