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2025 First Half Review
The first half of 2025 is officially in the books, making now a good time to check in on the state of the startup and VC landscape. While some year-to-date data is still trickling in, early trends already offer a revealing snapshot of where the market stands… and where it may be headed.
Funding Activity
Funding trends in early 2025 largely mirror those of 2024. From January through May, global VC investment is up 26% year-over-year, with AI accounting for nearly 49% of total funding, according to Crunchbase.
However, if you exclude OpenAI’s massive $40B round in March, overall funding levels are roughly flat compared to last year, though AI still represents a significant 30% share of all capital raised.
AI companies continue to dominate investor attention, but most other sectors are still grappling with the reality of depressed valuations. According to Carta, 19% of all funding rounds in Q1 2025 were down rounds: meaning startups raised capital at lower valuations than their previous rounds.
While this trend has been common since early 2023, the rate remains well above pre-2022 norms, reflecting continued pressure on companies that last raised during the peak of the 2021 market.
According to Heather Gates of Deloitte, "probably about one-third of the companies that raised in 2021 and 2022 at the really high valuations haven’t yet faced what the next round will look like, and how far down it might be."
Exit Activity
IPOs
Along similar lines, many companies are now confronting the reality of exiting below their prior high water marks. Notable 2025 IPOs like Chime and Hinge Health went public at valuations roughly 50% lower than their last private funding rounds, highlighting the continued reset in late-stage pricing.
That being said both companies have seen success so far on the public markets with Hinge Health up 28% since its debut and Chime has been able to hold its IPO price thus far.
ServiceTitan may be the most telling example of this dynamic. After raising a Series G at $118 per share in 2021, the company accepted a structured Series H down round at $84 per share in late 2022. It went public last fall at around $100, still below the Series G price but above the Series H, and recently exited its six-month lockup trading slightly above its IPO price. All in all, a solid outcome for employee equity holders.
Other notable venture-backed IPOs in 2025 include Coreweave, eToro, MNTN, Circle, Omada Health, and Caris Life Sciences. According to StockAnalysis.com, IPO activity this year (166 total IPOs) has already surpassed 2023 (154) and is on pace to exceed both 2022 (181) and 2024 (225).
If the current momentum continues, 2025 could end up with the third-highest number of IPOs since 2000, trailing only the boom years of 2020 and 2021. While a simple doubling of first-half figures isn’t a perfect forecast, current sentiment suggests IPO activity will remain strong through the rest of the year.
M&A
M&A activity has also been strong so far in 2025, with AI deals unsurprisingly leading the charge.
Through the end of May, Crunchbase reports $104.8B in global venture-backed M&A, nearly triple the same period in 2024. Even excluding Google’s $32B acquisition of Wiz, the total still comes in at more than double last year’s pace.
Why this matters: In venture capital, everything ultimately ties back to liquidity. When capital starts flowing back to investors, new funds get raised and fresh rounds follow. After a tough couple of years with limited exits, the first half of 2025 has brought a meaningful return of liquidity, fueling renewed optimism for the second half.
For startup employees, this is an encouraging signal. But it’s crucial to understand where your company sits on the path to an exit. Not all startups are on the same timeline, and the road from growth to liquidity can vary widely.
Tips of the trade
A section where we provide helpful tips for anyone with stock options or shares at private companies.
Exits and Liquidity (IPOs & M&As)
We talk a lot about IPOs and M&A from the company level, but what do these exit events mean for employees?
Initial Public Offering (IPO) - An IPO is when a private company lists its shares on the public markets for the first time. An IPO is the ultimate goal of most startups, and results in both common and preferred shareholders receiving publicly tradable stock. Shareholders are not taxed until they sell, unless they have “double-trigger” RSUs.
The main wrinkle with IPOs is insiders (any private shareholder) are not allowed to sell shares for 6 months. Many think this is to prevent “insider trading” but most of these shareholders do not have access to material non-public information. The true reason for the 6 month IPO-lockup period is to prevent investors from selling their shares and depressing the share price. Banks that lead IPOs want the shares to “pop” and preventing insiders from selling alleviates downward pressure on the stock.
Mergers & Acquisitions (M&A) - Getting acquired can be a great outcome for private company. Many companies will never get large enough to be IPO, and must rely on an M&A exit. Others plan IPO before a buyer offers the right price. In adverse cases, companies sell off assets to generate cash and pay back investors. M&As are a necessary part of the private company lifecycle allowing larger companies to purchase whole businesses rather than attempting to build them from scratch.
Companies can be acquired for either stock or cash (or a combination of the two).
When a public company buys another company with stock, shareholders of the acquired entity receive stock in the acquiring company. Typically taxes are not owed until this newly acquired stock is sold. Ex: if Microsoft buys your startup, you will get publicly tradable MSFT stock.
When a private company buys another private company using stock (ex: Airbnb buys HotelTonight in 2019), shareholders receive shares in the acquiring entity, but are not taxed unless they also receive cash.
Cash is simple, shareholders get cashed out for their stock. The only downside of a cash transaction taxes are due immediately.
The biggest wrinkle with private company M&As is the rights of the preferred stockholders. At minimum, Venture Capital investors will guarantee at least their money back in an acquisition. Ex: If your company raised $100M in funding and is acquired for $100M, that money will go to the preferred stockholders. Common stockholders receive nothing.
Before reaching IPO or M&A many startups are semi-liquid through the private secondary market, which we have covered in the past.
Funding your option exercise can be expensive and a require a large capital outlay. Feel free to reach out to us to discuss your options for partnering with ESO to exercise your options risk-free.
The ESO Fund does not provide legal, financial, or tax advice.
June's Top Ten:
You.com in Talks to Raise at $1.4B Valuation
You.com, the AI-native search assistant founded by Richard Socher, is reportedly raising a new round valuing the company at $1.4B. Backers include Cox Enterprises, following strong growth to over $50M in ARR. The round would validate vertical AI platforms betting on differentiated UX.
SpaceX Projects $15.5B in 2025 Revenue
SpaceX is reportedly on pace to generate $15.5 billion this year, up sharply from 2022. Starlink continues to drive non-government revenue, while $1.1B comes from NASA contracts. Elon Musk says the company will soon outpace NASA's own annual budget.
Meta “Invests” $14.3B in Scale AI at $29B Valuation
Meta has acquired a 49% stake in Scale AI, bringing its valuation to $29B. Founder Alexandr Wang will join Meta’s internal “superintelligence” team. The move has already disrupted the AI data ecosystem, causing ripple effects among Scale’s existing clients like OpenAI and Google.
Anysphere Reaches $500M ARR in Under 3 Years and Nabs a $9.9B Valuation.
AI infra startup Anysphere claims it’s now generating $500M in annual recurring revenue just 2.5 years after launch, and recently raised at a $9.9B valuation. The round was led by Thrive Capital, and the growth places Anysphere among the fastest-scaling startups in AI tooling.
Navan to File for Fall IPO
Corporate travel and expense platform Navan (formerly TripActions) is expected to file its S-1 imminently. The company is backed by Andreessen Horowitz and is pursuing a public listing this fall. If successful, Navan would be one of the first SaaS IPOs post-2021 from the T&E sector.
Ramp Raises at a $16B Valuation
Spend management unicorn Ramp raised a $200M new round led by Founders Fund, which valued the company at $16B. The raise comes amid strong revenue growth and renewed fintech investor appetite.
Canva Plans Secondary Offering at $37B Valuation
Design SaaS giant Canva is preparing a secondary share sale or private offering valuing the company at $37B. The Australia-based platform has been growing revenue steadily while delaying a formal IPO timeline.
Polymarket Nears $200M Raise at $1B+ Valuation
Decentralized prediction markets platform Polymarket is reportedly close to a $200M fundraise that would bring its valuation past $1B led by Founders Fund. The round could mark one of the largest crypto-native raises of 2025.
Circle’s IPO Win
Stablecoin issuer Circle IPO’ed this past month and its been crushing in the public markets. The stable-coin company initially IPO’ed at a price of $31, but is currently trading at around $185 a share, a whooping nearly 600% uptick. The IPO is a bright spot for crypto in the market.
Chime IPOs
Chime finally IPO’ed this past month, and while its performance has not been as knockout as Circle, its been holding up in the public market. The neobank debuted at a price of $27 a share and is trading today around $32 today, about an 18% increase.
Why It Matters:
June’s stories show just how bifurcated the market has become: hyperscalers like Meta are writing $10B+ checks into AI infra, while smaller startups like Anysphere are showing unprecedented ARR velocity. On the fintech front, IPOs are back, from crypto rails to neobanks to T&E software, suggesting investor sentiment is stabilizing across verticals.
Startups that are hiring!
Open positions are per the company's website.
About ESO Fund
ESO Fund empowers startup employees to turn their stock options into reality. Since our inception in 2012, we've been dedicated to providing risk-free funding for the exercise of stock options, ensuring that individuals can seize the opportunities embedded in their equity.
Our mission is simple: to make equity compensation accessible and understandable. Through our innovative solutions, we've assisted countless individuals at 650+ companies in realizing the full value of their stock options, contributing to the success stories of numerous startup employees.
For more information on ESO Fund and how we can help fund your option exercise, please refer to our website at www.esofund.com!