Economic trends influencing startup funding
in 2025

January 31, 2025

Starting a tech company is an exciting endeavor, but let’s face it—getting the right funding can make or break your dream. Your funding path directly impacts your startup’s trajectory and shapes its growth, strategy, and long-term success. At KassaiLaw, we’ve been helping startups like yours navigate this tricky space, offering not just legal advice but strategies that bring together tech, business, and legal expertise to set you up for success.
But before you commit to a funding source make sure to consider the economic trends influencing them. In this article, we’re breaking down these five key factors affecting the funding of your tech startup in 2025. If you would like to learn more about founding sources, click here to read our next article.

    • Impact: The lingering effects of economic crises, inflation, and market volatility have made investors more risk-averse. Startups are being scrutinized more rigorously, with a preference for businesses that demonstrate immediate profitability or strong, recession-resistant value propositions. This trend affects high-growth startups that require large funding and longer runway periods, as VCs and angels may avoid taking excessive risks.

    • Pro Tip: You might face longer funding cycles and lower valuations. Plan for it.

    • Impact: With central banks raising interest rates globally, borrowing costs have surged, making debt-based financing like loans and revenue-based funding more expensive than ever.  Startups relying on these models face increased pressure to maintain cash flow and profitability, as higher interest payments eat into operating budgets.

    • Pro Tip: Consider alternatives like non-dilutive funding sources such as government grants or equity funding to avoid those crushing repayment burdens.

    • Impact: Trade conflicts, supply chain disruptions, and restrictions on foreign investments due to geopolitical rivalries (e.g., U.S.-China tensions) limit access to cross-border capital. Startups in regions heavily reliant on international investors may struggle to secure funding. Conversely, localized funding ecosystems and regional investors are becoming more critical.

    • Pro Tip: Tailor your fundraising strategies to attract local or region-specific investors who understand your market. You may need to diversify revenue sources to reduce dependency on global markets.

    • Impact: With sustainability and social responsibility at the forefront, investors are increasingly prioritizing startups aligned with ESG principles. This is particularly true for startups in industries like green technology, renewable energy, or ethical AI. Companies that fail to demonstrate a clear commitment to ESG risk are excluded from many investment portfolios.

    • Pro Tip: Integrate your ESG strategy into your operations and make it a part of your pitch—investors now demand detailed reporting on sustainability metrics and social impact.

    • Impact: Artificial intelligence, blockchain, and other cutting-edge technologies are reshaping industries and drawing immense investor attention. Startups leveraging these technologies or innovating in areas such as autonomous systems, cybersecurity, or Web3 are more likely to secure funding. However, this creates increased competition in these sectors, leaving less room for non-tech or traditional startups to gain traction.

    • Pro Tip: Startups in high-demand tech fields are achieving higher valuations and attracting more investor interest, but they face heightened expectations for rapid scalability and innovation.

If you would like to know more about the world of startups, or have any questions regarding starting one, do not hesitate to contact us , or book a consultation with one of our colleagues by clicking here.

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“Is your team the dream team? How much percentage should each founder get?” One of the core ingredients to success is the right team with complementing skills and personalities: early stage investors (and business partners too, by the way) will invest in the team, not the idea. Our goal is to guide you in building a strong and well-functioning team, as well as help you uncover potential friction points or weaknesses in the team, so that you can address them in the very beginning. When it comes to the fair split with your co-founders, if you need a reference point, or just want reassurance, we have developed our own tool for equity split calculation. Hint: the one answer that’s certainly wrong is a hasty 50-50 split.

You have spotted a problem and found a viable solution – in other words, you have your idea. What’s the next step? You need to make sure that the problem your business is trying to solve is a valid problem for a wide enough group, and that

Are you sure that the problem your business is trying to solve is a valid problem for a wide enough group? 

When you spot a problem and think you have found a viable solution to create a business around, it’s all too easy to get excited and jump straight into ideating a solution.

Avoid making something and then hoping people buy it when you could research what people need and then make that.

It doesn’t make any sense to make a key and then run around looking for a lock to open.

There are many ingredients in the recipe for creating a successful startup, but most certainly whatever you read and wherever you go, one of the first pieces of advice is going to be to do your homework properly regarding the validation. You have to validate both your problem and your solution to be able to define the perfect problem-solution and later on the product-market fit. If you manipulate your future customers into liking your solution or do not reveal all the aspects and layers of a problem you identified, your idea can easily lose its ground and with that the probability of it surviving and actually being turned into a prosperous business. Let us know if we can help at this initial but yet super-important stage.

Validation is the first step in moving towards learning more about the problem you are ultimately looking to solve.

Finding your unique value proposition is only possible if you take a thorough glance at your competitors. The world of tech is highly competitive, particularly so when you operate in a field with low entry barriers, you need to carefully examine and regularly update the news and developments of those companies who act in the same field and market. This might lead to several pivots for you if necessary, because you can significantly increase your chances of success if you can offer a—at least in some aspect—unique solution to your customers. The introduction as “we are like Uber/Snapchat/WeWork/Spotify, only better” is hardly sufficient in most cases. Unless you really are so much better, but then you need to know that too, so up the competitive analysis.