A Founder’s Toolkit: 2025 Startup Evolution Recap & Outlook for 2026

Over the year, our Startup Evolution series walked through the founder’s journey, from structuring a startup at inception to navigating Series A term sheets. (If you have been following along, you may have noticed we took a brief hiatus in October and November, a pause driven by increasing client deal activity in Q4, which is a great problem to have!) This uptick in our real-world deals mirrored broader market trends:

2025: A Year of Rebound and Founder Momentum

• Funding Uptick: After the post-2022 slowdown, venture funding began rebounding in 2025. Global startup investment in the first half of 2025 was the strongest since early 2022, signaling a tentative recovery in private markets. Investor appetite showed renewed energy, albeit fueled at least partially by continued AI enthusiasm, a rebound in M&A activity and even renewed IPO hopes. In fact, Q3 2025 saw global VC investment climb to $120 billion (up from $112 billion in Q2), marking the fourth consecutive quarter of growth as investor sentiment steadily improved.
• Competitive Deals & Founder Leverage: 2025 turned into a founder-friendly environment in many respects. With investors eager not to miss out on the next big thing (especially in hot sectors like AI), many startups saw larger funding rounds and quicker deal timelines. Nearly 700 seed-stage rounds of $10 million or more took place in 2025. This increased activity meant that, unlike the tougher terms seen during the 2022–2023 dip, top founders in 2025 often held the cards. In specific high-demand sectors, founders tipped the scales and obtained founder-friendly terms. All of this is a strong indicator that confidence is coming back.
• Market Fundamentals: Importantly, 2025’s boom was not just about hype; it also rewarded preparation and solid fundamentals. Founders who took the time to build robust data rooms, protect their IP and establish sound governance (themes we emphasized in our toolkit series) were well-positioned to capitalize on the resurgence. We also saw a pickup in exit opportunities – acquisitions of venture-backed companies more than doubled year-over-year. Improved liquidity pathways (more M&A and hints of IPO windows reopening) further boosted optimism in the ecosystem.

2026 Outlook: Cautious Optimism and New Opportunities

As we turn toward 2026, the outlook is exciting (with a dose of realism). Here is what founders and investors can expect in the new year:

1. Investors Back in Action: The steady improvement in investor sentiment sets the stage for robust deal-making in 2026. Many VCs are entering the year bullish about the market’s potential. With interest rates stabilizing and some blockbuster 2025 funds to deploy (particularly in tech), we anticipate more capital looking for quality opportunities. In practical terms, founders should be prepared for more investor outreach and faster-moving term sheets, especially if you are operating in a trending sector. Investor interest appears to be returning, and that means more competition (and potentially higher valuations) for promising startups.
2. Founders as Buyers: Strategic Acquisitions, Tuck-Ins and Roll-Ups: One of the more recent trends we saw in 2025 was founders leading dealmaking. More startups began using targeted acquisitions and minority investments as a growth tool. In many cases, buying a product feature, a team, a customer base or a distribution channel became faster and more predictable than building from scratch, especially in crowded markets where speed matters. Heading into 2026, we expect that dynamic to continue, but the form will depend heavily on your company’s position and the market. When fundraising is competitive and balance sheets are stronger, you see more ambitious platform plays. When capital tightens, the activity shifts toward smaller, “efficient” tuck-ins that solve a specific gap and can be integrated quickly.
3. Continued Tech Trends (and Rationality Check): There is no denying that certain sectors (AI, as already mentioned a few times in this article) will continue to dominate headlines and investor checkbooks in 2026. AI remains a defining theme, attracting enormous capital across the globe. That enthusiasm should persist, so founders in AI or related fields will find investors receptive. However, expect a bit more scrutiny amid the excitement. Even as FOMO drives big bets, investors know a “reckoning” could loom for over-inflated ideas. In 2026, deals will happen, but truly sustainable business models and clear paths to revenue will stand out. Investors are increasingly balancing their optimism with due diligence to find the real winners. For founders, this means it is a perfect time to chase bold opportunities and to double down on metrics and execution. The market is optimistic, but also wiser from the past few years.

In summary, 2025 re-energized the startup world and our brief break from publishing was a direct result of that positive busyness. Going into 2026, there is genuine cause for optimism. Investor wallets are reopening, founders are steering deals on their terms and innovation is buzzing (especially in areas like AI, climate and biotech). If you have built a strong foundation during the lean times, 2026 could be your year to shine. We will be cheering you on and, as always, we are here to help you navigate the journey ahead. Here’s to a prosperous and innovative 2026!

Author Jason Acevedo is a partner in the Venture Capital & Emerging Growth practice group in the Corporate and Securities Department at Klehr Harrison.

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