Chris Pratt and Katherine Schwarzenegger flaunt family time at farmers market in Los Angeles

In December 2024, Forum Ventures released a report analyzing the changes in the venture capital environment for pre-seed and seed funding in North America. The study, which surveyed 150 venture capitalists across 300+ pre-seed and seed deals throughout 2024, revealed significant shifts in investor behavior and preferences due to a market correction affecting fundraising levels. The report indicated that while past years saw peak fundraising, 2024 funding levels were projected to fall below the benchmarks set in 2016. This downturn necessitated adaptability from founders to navigate the changing landscape ahead of 2025. The findings illustrated a notable pivot from a focus on general-purpose generative AI towards more industry-specific applications. Sectors like healthtech and fintech captured substantial investor interest, accounting for 12.9% and 9.1% of investments, respectively. Additionally, demographic shifts were observed, with Texas making strides as a significant hub for venture-backed startups—its share rising from 4.2% in 2023 to 10% in 2024. The concentrated focus on the founding team emerged as a key metric, with 70% of investors identifying the founding team as the most critical factor in investment decisions, overshadowing other considerations such as business model and product features. The study highlighted the increasing importance of traction metrics in securing funding—the median seed deal size had reached $3.1 million, with investors increasingly seeking early signs of traction before making commitments. This necessity for demonstrated success extended to bridge rounds, where 36% of investors reported greater participation due to prolonged periods between funding rounds, which now averaged more than two years for Series A after seed rounds. Such changes demanded all founders, especially first-time entrepreneurs, to maintain a dedicated focus on execution and to navigate through the slow fundraising environment with patience. In summary, the landscape of venture capital funding is undergoing a crucial transition. With current liquidity challenges persisting, emerging managers face substantial pressure, impacting early-stage funding opportunities for founders. The report serves as a comprehensive guide for understanding these dynamics and emphasizes the need for adaptability among founders as they prepare to engage with investors who increasingly prioritize measurable success. This scenario sets a cautious optimism ahead for 2025, as both investors and entrepreneurs continue to evolve in response to new market realities.