What do startups need to do to succeed in the year ahead? What’s the next big use case for AI? And what would help Seattle’s tech ecosystem thrive?
We polled five venture capitalists from the Seattle region to get their takes on the trends, skills, and strategies that will define 2025. They include:
- Erik Benson, managing director at Voyager Capital
- Heather Redman, managing partner at Flying Fish Ventures
- Ken Horenstein, managing director at Pack Ventures
- Kyle Lui, general partner at Bling Capital
- Sri Chandrasekar, managing partner at Point72 Ventures
Read on for their responses, and wishing all GeekWire readers a happy new year.
The biggest tech trend in 2025:
Erik Benson: AI
Heather Redman: AI continues to rule in 2025, only more so, with more emphasis on AI infrastructure than ever, especially anything that lowers the cost of training and inference.
Ken Horenstein: Agents for everything. We are finally hitting a point in software where it can start to reduce human work hours; instead of shifting human work from pen and paper or one software application to another, the software itself will do the next action you want to take.
Kyle Lui: AI will be embedded in daily consumer interactions, benefiting both large incumbents embracing AI and newer startups delivering significantly better consumer experiences.
The most overhyped tech in 2025:
Erik: Crypto.
Heather: Also AI — expectations for near-term use cases and for revenue keep going higher.
Ken: Crypto. Our fund doesn’t invest in crypto, but I do personally. You can call me a crypto skeptic, but despite the massive run up in bitcoin and other cryptocurrencies in the past year, I still haven’t seen a core use case for the technology emerge. I think it is tremendously interesting as a market and store of value, but the rise to BTC $100K didn’t come with any new breakthroughs in use cases.
Kyle: Retrieval-Augmented Generation (RAG).
Sri Chandrasekar: Anything with the word “agentic.” Building automation is hard — with or without modern post-LLM AI. But I think that everyone will toss the word “agentic” into their products and it won’t mean much at all.
The hottest AI use case to emerge in 2025:
Erik: AI agents to improve customer experience and lower churn.
Heather: AI that makes AI more efficient.
Ken: Insurance/financial underwriting will be huge in software startups because the foundation models are arguably much better than humans already. This year and the next 10 years are going to explode with AI + biotech. Compared to the progress we have made with software startups in the past two years, the convergence of AI and biotech is in the very very early innings.
Kyle: Traditional verticals (e.g., healthcare & life sciences, manufacturing and construction) will embrace end-to-end GenAI solutions that will 10x efficiency through productivity gains and cost reductions.
Sri: Process mining. What’s old will be new again — process mining is an old technology (analyzing log files to automatically discover business processes) that I think will be revitalized by using modern AI. I think companies that try to build automation without understanding their own existing business processes will be wasting money.
The tech skill that will be most in demand for hiring in 2025:
Erik: AI engineering.
Heather: PhD-level AI skills.
Ken: Back-end infrastructure and data engineers. Cursor, Copilot and others are making rapid advancement here, but knowing how to orchestrate your data in a cost efficient manner is a hot topic for every software startup that is leveraging these foundation models. Funny enough, this might be one of the least in demand jobs in 1-to-2 years, once the best practices and tools to manage these models are flushed out.
Kyle: AI fluency for DevOps (due to costs).
Sri: Product managers with deep domain expertise. I see this as the critical skillset that will unlock the ability for AI to impact enterprises and their workflows.
The biggest tech company pivot/strategy shift in 2025:
Erik: Seat-based SaaS pricing and business models shifting to usage-based pricing for AI-enabled MSSPs (managed software and services providers).
Heather: From purchasing SaaS to purchasing agents.
Ken: Data analytics companies are going to have to offer much more in 2025 or their revenue, users and traction are going to fall off the cliff. Everyone essentially has a Ph.D. analyst in their pocket now. If you were selling your product purely based on analytics, it is time to start developing agents that take action with that analysis.
Kyle: Usage or value-based pricing will surpass per-seat pricing for software businesses.
Remote work will be ___ in 2025.
Erik: Dead.
Heather: On a steady but measured decline.
Ken: About the same in 2024. The live-work balance with some remote optionality will be here to stay for roles that can make it work. We will see more “return to office 5 days a week” announcements, but those companies will still be much more flexible with occasional remote work. Most founders and CEOs I’m talking to are glad to be back in office 3-to-4 days a week if possible. Some founders are still leaning into the remote-first company culture.
Kyle: Passe.
Sri: The same. I think the number of companies that will make significant changes to their work-from-home policy will be de-minimis.
The Seattle tech ecosystem needs more:
Erik: Employers to follow Andy Jassy’s recommendation to return to the office.
Heather: New companies started by locals and by newcomers.
Ken: We need more early-stage risk capital, with individuals writing $5K–to-$25K checks based on trust and experience with founders, not extensive financial models, alongside 2–3X more institutional pre-seed and seed capital. Simultaneously, we need founders who think beyond short-term milestones, focusing on building industry- and technology-defining companies. We get pitched a lot of incremental change companies, which are difficult to make last and build into a $1B+ company.
Kyle: Operator or ex-founder angel investors.
Sri: Ambition. I believe that our founders are some of the most technically sophisticated and scale-oriented people that I meet. But I’d like to see them swing a bigger bat.
The Seattle tech ecosystem needs fewer:
Erik: Taxes.
Heather: Reasons to think about relocating.
Ken: “Playing it safe” founders and investors. There is a time and a place for a nice lifestyle business, but not in venture. Startups and startup investing is about taking the right type of risks.
Kyle: Venture studios.
The startup I’m most intrigued by (not in my portfolio):
Erik: Kobayashi Winery founded by Travis Allen (you didn’t say tech startup, but if you had, then Proprio founded by Gabe Jones).
Heather: Mira Murati’s new thing.
Ken: Xaira — one of the largest funding rounds in Seattle history. We are really curious how they turn this capital into therapeutics and new drugs.
Kyle: Logic.inc.
Sri: Can we consider xAI a startup? I’m curious if we see any adoption of xAI’s models. In my view this will be a leading indicator of whether OpenAI can maintain a lead in an industry where there are low switching costs.
Startup founders should prioritize ____ in 2025.
Erik: Generating positive EBITDA.
Heather: Fundraising.
Ken: Traction. It is exponentially easier today to deliver value to customers, at a faster pace. Now is the time to launch the product, get beta users, start a waiting list, or said in another way, just getting going.
Kyle: Efficient growth. We will see companies approach $100 million ARR (annual recurring revenue) with less than 50 employees.
Sri: Growth. Efficiency was the name of the game for the last 2-to-3 years but now is the time for many companies to put their foot on the gas.
https://ift.tt/4XQBUqN January 02, 2025 at 03:00PM GeekWire
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