Business & Legal Developments | January 2025
Looking back at 2024, it’s clear that the venture capital landscape has experienced a year of both significant transformation and cautious optimism. Throughout the year, recurring themes of technological innovation, strategic investment, and adaptive market behavior have defined the narrative for investors, founders, and other stakeholders in the startup ecosystem.
Another theme for venture capitalists was “DPI”, or the ratio of distributed to paid-in capital. With the IPO window firmly shut in 2024 and the government restricting mergers and acquisitions, especially in the tech industry, venture capitalists did not see many exits from their portfolio, rendering DPI ratios at historic lows. When DPI is low, investors don’t want more capital called, even if already committed, and are loath to make new commitments. This made for paralysis in 2024. There is optimism that changes in policy and market conditions will pave the way for more DPI in 2025, and an unfreezing of the venture ecosystem.
At the start of 2024, there was some hope as the Federal Reserve announced plans to cut interest rates, which promised to ease economic pressures from previous years. However, the venture capital industry continued to face low DPI, caused by the lack of an IPO window, fewer exits and slower fundraising. Reports showed a 48% drop in fundraising compared to the peak in 2021, and experts think full recovery may not happen until after 2028.
Despite facing challenges, there is still a large amount of money available for investment, with $311.6 billion in reserves. This shows that there is a lot of potential that hasn’t been tapped yet. Investors are now focusing on improved DPI ratios and how to use their capital wisely. Many funds are choosing to invest more slowly and carefully to manage risks and increase returns.
Several sectors stood out in 2024 as key drivers of growth and innovation:
- Artificial Intelligence (AI): AI dominated the venture capital landscape, accounting for 28% of all VC funding by Q2 — the highest quarterly share on record. Sub-sectors like generative AI, AI visual media, and operational AI led to groundbreaking advancements, attracting billions in investments and reshaping industries from health care to creative content.
- Creator Economy: Creator-focused startups experienced sustained growth, driven by innovative platforms and tools that empower individuals to monetize their creative output. Despite a cautious investment climate, the sector demonstrated resilience and year-over-year funding growth.
- Biotech and Health Care: Boston retained its reputation as a global hub for life sciences, with significant investments in biopharmaceuticals, healthtech, and genomics. The city’s robust startup ecosystem played a critical role in advancing medical innovation.
- Fintech: After a period of decline, fintech investment rebounded in Q3 and Q4 as venture capitalists renewed their focus on digital banking, payment solutions, and insurtech.
Early-stage startup valuations remained surprisingly resilient throughout 2024, with median pre-money valuations for U.S. VC early-stage deals holding steady at $45 million. Investors continued to pay premiums for promising AI and fintech companies, even as overall deal activity decreased. Meanwhile, the M&A market experienced a resurgence, with Q3 showing notable growth in acquisitions driven by stabilized valuations and an improving economic climate.
The Bay Area is not just surviving — it is thriving as the global epicenter for venture-backed startups.
According to recent Crunchbase data, Silicon Valley proved its dominance once again, pulling in a staggering $90 billion of the $178 billion in global venture funding in 2024. That’s 57% of all VC dollars worldwide.
San Francisco is still the heart of the action, with companies like OpenAI leading the charge. OpenAI attracted major VC dollars and ignited an entire AI eecosystem in the city. Other notable funding stories include:
- Databricks: Raised $10 billion, setting records.
- xAI (Elon Musk’s latest venture): Secured $12 billion across two rounds and moved into OpenAI’s former headquarters in the Mission District.
- Waymo (Mountain View): Closed a $5.6 billion Series C.
- Anthropic: Raised over $8 billion.
- Scale AI and Perplexity (SF-based): Achieved major funding milestones in 2024.
This is not just chance. The Bay Area benefits from its deep bench of skilled tech employees, with 49% of Big Tech engineers and 27% of startup engineers based here. It also thrives as a home to notable Tech giants like Google, NVIDIA, and Salesforce.
The Bay Area’s dominance in tech and AI is fueling a self-sustaining cycle of innovation. With 2025 already underway, we will keep a close eye to see what happens next.
As 2024 concluded, several trends pointed to a brighter future for the venture capital industry:
- Strategic Focus on Deployment: Fund managers adopted disciplined investment strategies, aligning capital deployment with prevailing economic conditions.
- Technology-Driven Growth: Advances in AI, sustainability, and digital innovation positioned these sectors as critical areas for future investment.
- Collaborative Ecosystems: Events and initiatives fostered collaboration among entrepreneurs, investors, and industry leaders, reinforcing the importance of community-driven growth.
Looking ahead to 2025, the venture capital industry is expected to begin a slow and steady recovery. Stakeholders should stay flexible and plan for the future. They need to use what they learned in 2024 to adapt to a changing market with fast technology growth and ongoing economic uncertainty.
As always, do not hesitate to contact us if we can help you brainstorm a legal or business challenge you are facing or connect you to a potential investor, professional, or entrepreneur.
Spotlight on JPM — An Evening With Friends
J.P. Morgan Health Care Conference | January 13, 2025
Foley & Lardner proudly sponsored and hosted a memorable evening on Monday, January 13, at SHACK15, bringing together colleagues and entrepreneurs from across the health care and life sciences sectors. Guests enjoyed a vibrant social atmosphere tailored for founders, innovators, and change-makers, set in the iconic Ferry Building with panoramic views of the Bay.
Events
Upcoming:
CES Decompression by Mavka Capital | January 15, 2025
Foley is pleased to partner with Mavka Capital for an exclusive CES Decompression event in Palo Alto. Together, we will explore cutting-edge developments in mobility, energy, and AI, featuring insights from Vladislav Voroninski, CEO of Helm.ai, and Nikita Bridan, CEO of Oilstainlab. This event offers a unique opportunity to connect with leading founders and funders while enjoying drinks and engaging discussions on the most exciting innovations showcased at CES.
Silicon Slopes Summit 2025 Networking Reception | January 16, 2025
As Foley continues to support the Silicon Slopes Summit, our Innovative Technology sector has teamed up with Trustpoint.One, Silicon Valley Bank, Ampleo, and Tanner LLC to keep the conversation going after day four. Join us for an exclusive networking reception at Van Ryder, Salt Lake’s premier rooftop bar located at the Le Meridien hotel in the heart of downtown.
Recent:
Reception and CLE Luncheon during J.P. Morgan Healthcare Conference | January 8, 2024
Coinciding with the timing of the J.P. Morgan Healthcare Conference, Foley kicked off the festivities on Monday, January 8, 2024, with a wonderful evening shared with colleagues and entrepreneurs across Life Sciences. Guests enjoyed a great social space at the iconic Ferry Building, offering panoramic views of the Bay. The evening was co-hosted by Bioluminescence Ventures, Crosstree, Flagstar, and Slone Partners.
Korean Startups & Entrepreneurs: Innovation Weekend | December 13, 2024
Foley & Lardner hosted and sponsored an event on December 13th for Day 1 of the KSE Innovation Weekend, dedicated to empowering founders and aspiring entrepreneurs. Organized by Korean Startups & Entrepreneurs (KSE), World OKTA NY, Korean Tech Network (KTN), and Asian Hustler Network (AHN), this event covered the exciting growth journeys of startups. The day featured insightful sessions and fantastic networking opportunities.
Relationships and Raising: How Female & Non-Binary Founders Can Leverage Networks for Fundraising | December 5, 2024
We hosted an exclusive lunch where attendees learned how to leverage relationships that could transform their approach to raising capital. In early-stage fundraising, it is often relationships that lead to securing the necessary funding for growth. Foley, alongside Scroobious, brought together a group for an afternoon of networking and knowledge-sharing, where participants gained valuable insights from a variety of ecosystem perspectives. The session focused on strategies for building meaningful relationships with investors and effectively leveraging networks for successful fundraising.
GLP-1 Drugs: What’s Next after FDA’s Resolution of Drug Shortages | December 4, 2024
Since 2005, GLP-1 drugs such as Ozempic, Mounjaro, Wegovy, and Zepbound were approved by the U.S. Food and Drug Administration (FDA) to treat type 2 diabetes. With the growing popularity of these medications for weight loss, GLP-1s became in high demand, leading to shortages of these drugs. On October 2, 2024, the FDA determined that the shortage of the tirzepatide injection, a glucagon-like peptide 1 (GLP-1) medication, had been “resolved.” Now that the tirzepatide injection shortage has been resolved and removed from the FDA’s drug shortage list, questions remain about what happens next and what the future holds for compounded GLP-1 drugs. In a recent webinar, Nate Beaver, co-chair of the firm’s Medical Devices Area of Focus, and David Rosen, leader of the firm’s FDA Practice Group, discussed these topics as they relate to GLP-1 drugs.
Thought Leadership
A New Era for the FTC
As 2024 comes to a close, so does the current leadership of the FTC. The switch in administrations comes with a transition in leadership at government agencies, and the incoming Trump Administration has just announced its pick to head the FTC. President-Elect Trump has selected Andrew Ferguson as Chair of the agency, a current commissioner with the FTC, and former solicitor general of the Commonwealth of Virginia. This article was authored by Louis Lehot and Benjamin Dryden.
The 2025 IPO Market
Are we headed for an IPO rebound in 2025? According to a recent CNBC article, a major window for the IPO market could be opening. They point to prime conditions such as markets at new highs, interest rate stabilization, a strong economy, and of course, the election is now over, and we have a better sense of the new administration’s plans moving forward. This article was authored by Louis Lehot.
The Intersection of Agentic AI and Emerging Legal Frameworks
The evolution of artificial intelligence (AI) has introduced systems capable of making autonomous decisions, known as agentic AI. While generative AI essentially “creates” — providing content such as text, images, etc. — agentic AI “does” — performing tasks such as searching for and ordering products online. These systems are beginning to emerge in public-facing applications, including Salesforce’s Agentforce and Google’s Gemini 2.0. This article was authored by Chanley Howell and Alex Liederman.
SEC Enforcement Action Against Church & Dwight Director: Lessons for Outside Directors
The SEC’s settlement with James R. Craigie, former CEO, chairman, and director of Church & Dwight Co. Inc., for violating proxy disclosure rules by standing for election as an independent director without disclosing his close personal friendship with a senior Church & Dwight executive has caused consternation in the legal community regarding when a friendship jeopardizes director independence under stock exchange rules. That question is very fact specific, and the settlement does not provide a lot of useful guidance. However, the settlement is important for outside directors for a more basic reason: It shines a light on the need to be “honest, truthful, and forthright” when completing D&O questionnaires because directors may be held personally responsible under the SEC’s anti-fraud rules based on the information they provide in those questionnaires.
Deals
Foley Advises 3MG Solutions in Investment from Bayview Asset Management
Foley & Lardner LLP served as legal advisor to 3MG Solutions, a provider of residential and commercial roofing services across Florida, in its investment from Bayview Asset Management.
Foley Advises Pyrotek Special Effects in Acquisition by Gladstone Investment Corporation
Foley & Lardner LLP served as U.S. legal advisor to Pyrotek Special Effects, Inc., an Ontario-based pioneer in live entertainment for special effects services and solutions, in its acquisition by Gladstone Investment Corporation. To complete the acquisition of this new portfolio company, Gladstone Investment partnered with long-time Pyrotek CEO & President Scott Dunlop, who will remain in those roles. Gladstone Investment provided equity and senior secured debt to complete the transaction.
Foley Represents Square Robot in Series B Funding Round
Foley & Lardner LLP represented Square Robot, Inc., a global leader in robotic tank inspections, in its successful Series B funding round, which closed in November 2024. The funding will drive the company’s domestic and international expansion to meet accelerating global demand for its innovative services.
Foley Represents Upload Ventures as Investor in $120 M Series C Financing for Tractian
Foley & Lardner LLP represented Upload Ventures as an investor in the $120 million Series C funding round for Tractian, a leader in Manufacturing AI. The round was led by Sapphire Ventures and included additional investors General Catalyst and NGP.
Foley Represents Wine Access in Acquisition by Full Glass Wine Co.
Foley & Lardner LLP represented Wine Access, a leading online platform for discovering and purchasing premium wines and a Norwest Venture Partners portfolio company, in their acquisition by Full Glass Wine Co., a rapidly growing direct-to-consumer wine company. The acquisition will allow Wine Access to leverage advanced technology and operational efficiencies, enhancing its ability to connect wine enthusiasts with exceptional, often hard-to-find wines.
Additional Articles of Interest
Executing Audit Committee Oversight in Turbulent Times: Risk Management and Financial Reporting
Key Takeaways from the 2024 Venture Revolution Conference in San Francisco
BREAKING: Federal Court Enjoins Government from Enforcing Corporate Transparency Act
Louis Lehot and Brian Wheeler Discussing Dealmaking in 2025
Foley Featured for Roundtable Insights on Exits and M&A in 2025
Brian Wheeler Quoted on Dealmaking in GP-led Secondaries Market
Injunction Stayed: Corporate Transparency Act Enforcement Resumes
Nationwide Injunction Reinstated: Corporate Transparency Act Enforcement Paused
Authors
Partner, Venture Capital
Silicon Valley / San Francisco / Los Angeles
