The Hypergrowth Startup Index 2025: Part 1
The Current State of Startup Growth
Funding trends
There’s no question that the post-pandemic investment frenzy is over. Average deal volume has declined 50% from a peak of over 20,000 deals per month in 2021 to around 10,000 per month in 2024, but is beginning to normalize after the post-pandemic pop. At the same time, deal size has grown significantly — a 40% increase year-over-year — and total monthly capital is rising as well, already reaching an average of $750M in 2025.
For companies with valuations over $500 million, things are stable. Deal size has remained steady at roughly $1 million per deal since 2002, and those deals have been growing in size year-over-year since 2021. Investments in these high-value startups reached nearly $800 billion in 2024.
"We're in a very intriguing startup ecosystem right now. We've never seen so much capital consolidation in the top 20 firms, and we've never seen those funds so large," explains Mark Roberge. "If you're managing a 5 to 8 billion dollar fund, you really can't do the 3 million dollar seed fund investment and have a company exit at 1 to 5 billion. It just doesn't move the needle. They have to look for a very specific type of entrepreneur and startup that exits at north of $10 billion at least, ideally $100 billion, and probably needs $100 million plus to get there. Those are fantastic outcomes. We've seen plenty of them. But it's a small fraction of the startup environment.”
How funding has evolved in recent years
Early-stage funding is recovering, but still competitive
Early-stage funding is recovering nicely from 2023, which saw a low point post-pandemic in venture activity. From Series A through F, deal volumes and average capital invested per deal increased in 2024, which is a promising sign, but the landscape is still competitive, and VCs are doubling-down on due diligence.
“Despite higher deal sizes, I’m still seeing a lot of volume. With that, the bar is even higher, and quality is a major focus. The competitive landscape remains tough — US companies serve the US well, and European companies do the same here. It’s more important than ever to over-diligence the competitive landscape before investing,” shares Laura McGinnis, Principal at Balderton Capital.
Seed stage investments are stable, but…
Series B and C startups are hot commodities for investors. Seed stage investments have remained stable at an average of ~50 deals monthly, with a slight decrease in average capital invested per deal year-over-year.
Series B and C companies saw a sharp increase in average capital invested per deal from 2023 to 2024. Investors are still looking to fund early-stage companies, but appear more interested in startups that have gotten past the initial stages of growth.
The startup space is in a "hype cycle on a hype cycle"
This is putting high-growth companies at risk. “I think [high] valuations [are the biggest risk for high-growth startups],” suggests Mark Roberge. “I’m worried about the ecosystem right now. We’re coming off of a massive hype cycle, like in ‘99 and ‘00. Unfortunately, that hype carried into the public markets, and led to a recession. In 2019, we had a very similar hype cycle in the public equity markets, driven by low interest rates. People were spending at crazy rates, with 50X price to sale ratios. The general ecosystem has moved on, they’re in the AI era, they want to spend more money. But people are calling that the 2020 vintage might be a 0.8 return. I think we might realize we have a hype cycle on top of a hype cycle, which could be bad.”
Strategic partnerships are gaining momentum and go beyond dollars
“[Strategic partnerships] have helped,” says Kishore Kothandaraman, co-founder of Goldcast. “For example: HubSpot participated in our seed investment and through the HubSpot Ventures team, we have been learning from HubSpot's product and marketing leadership as we scale our business into a multi-product platform. Their partnerships team have also helped us think through how to get the most from HubSpot's marketplace and partner agencies.”
Godard Abel, Co-founder and CEO of G2, agrees. “Strategic partnerships, in conjunction with strategic investments, provide much more in the form of product partnership, go-to-market via partner ecosystems, and brand impact than pure financial investments. We’re fortunate at G2 to have top strategic investors in HubSpot, Salesforce, and LinkedIn, all of which have accelerated our product partnerships and integrations to benefit joint customers. They have also fueled our G2 revenue growth rate by accelerating customer acquisition in our strategic partners’ ecosystems.
For example, together with our strategic partner HubSpot, we’ve launched an integrated customer solution that makes it easy for software companies to use G2 Buyer Intent data inside HubSpot. This allows them to efficiently target prospects shopping on G2 right from HubSpot and to accurately assess and measure the G2 ROI based on the influence of the sales pipeline and deals tracked within HubSpot. We have brought that solution quickly to hundreds of joint customers.”
AI, Gen Z, and Gen Alpha are shaping investment decisions
“We’ve sharpened our AI lens, with more sectors coming back into focus,” McGinnis adds. “Gen Z is increasingly shaping business direction, and we’re seeing B2B SaaS companies take a page from the consumer playbook — deepening customer focus, building strong brand identities, and investing in marketing in ways that feel more direct-to-consumer.” In the past 18 months, Balderton has adapted their investment strategy by “doubling down on AI expertise, being hyper-selective, and ensuring portfolio companies are positioned to withstand competition from both startups and incumbents.”
“When we're evaluating AI companies, we have to look very hard at how much risk there is from the foundational models,” shares Roberge. “In this case, a lot of times they're LLMs getting so good that it wipes out the value proposition of this business at the application layer. And then we have to look very hard at the risk of the current incumbents in the category of just building slightly more product to wipe them out. Now, we're starting to migrate to the AI agentic era. And I'm much more bullish around the sustainability of those business models.”
VCs want future-proof non-AI investments
Roberge adds, “When we're looking at [non-AI investments], it's ironic because we have to ask ourselves, ‘listen, you're an entrepreneur, you're at a million in revenue, you want to go on a VC track. We're looking at a five to 10-year hold period, right? What is the post-AI world going to look like in eight years? How is the problem you're obsessed with going to be solved when AI tech is that mature? And are you going to capture that?’
“The other piece I think you have to look at is whether or not there's a lot of demand for your type of business in the B, C, and D rounds. Are we setting up a growth plan that allows us to generate a venture capital return when the series A or the series B might be last money in? Those are some pretty unique evaluation lenses that I think have come up in the last year.”
G2’s Unicorn Fundraising Journey
After nearly ten years of growth, G2 turned to investors in 2021 to scale, and with strategic support, reached unicorn status the same year.
“Our investor relationships have evolved as we’ve raised a total of $257M,” explains Godard Abel. “We started with angel investors providing our seed funding all through a Permira-led growth equity Series D round in 2021.
“At the beginning, with our angel and seed investors — which included Mike Gamson, Chicago Ventures, and Hyde Park Ventures — the relationships were more informal advisory relationships. Fortunately, our early investors were hands-on and helpful in recruiting talent, building customer and partner relationships — including those with LinkedIn — and putting us on the radar of later-stage investors. Now that we’ve raised a Series D, we have a more formalized board and governance structure with more rigorous alignment with our board on strategy, financial, and operating plans. We are grateful that all our investors still remain hands-on in providing operating assistance, including recruiting leadership talent and global business and customer development.”
The startup exit landscape
Exits in 2024 were dominated by M&A and buyouts (leveraged or otherwise). Together, these two categories accounted for 74% of the top exits last year. While 2024 saw a massive initial public offering — OQ Base Industries — raise $487 billion and boast a $993.9 billion post valuation — IPOs represented only 6% of the total exits from last year.
“It’s kind of crazy how the failure rate returning 1X capital to the investors doesn’t decrease that much as you get from A to B to C to D to E to F. There have been so many IPOs, even where they IPO at a good time, then within the six month hold period where you can’t sell your stock, the market crashes,” says Mark Roberge.
With 3,771 IPOs in 2021, and 1,755 in 2024, it’s clear that more and more companies are seeking private instead of public liquidity. That said, there was nearly a 50% increase in IPOs between 2023 (1,986 IPOs) and 2024, and with 37 IPOs already in 2025 we may see more public offerings this year.
The emphasis on M&A suggests a more conservative market where established companies are looking to grow by joining forces with other established companies. These strategic partnerships average nearly $9.9 billion, nearly four times larger than buyouts, suggesting that joint ventures drive the largest deals.
With another 31% of exits attributed to buyouts or leveraged, we see private equity’s rising interest in entering the tech space. PE/buyout firms showed surprising strength last year with nearly a quarter of all deal flow (24%).
When it comes to average deal size for exits, clear trends emerge by industry sector. Energy companies are seeing the largest exits, averaging $6 billion per deal. This reflects the modernization of a traditional industry driving increased shareholder value in an industry that’s always seen high valuations.
Another traditional industry that’s seeing rapid modernization is financial services, which follows energy with an average deal size of $5.3 billion per exit. B2B products and services and IT are securing similar deal sizes ($4.8 billion and $4.6 billion per exit, respectively), while healthcare ($3.7 billion per exit) and B2C products and services ($3 billion per exit) round out the list.
While energy is the clear leader, the variety of industries receiving multibillion-dollar deals shows that all sectors have a path to growth. And with the largest average deal size only twice as large as the smallest when it comes to 2024’s biggest exits, there’s clearly plenty of investment capital to go around for companies that are well-established in their sector.
M&As
A closer look at mergers and acquisitions in 2024 reveals some interesting trends. Monthly M&A deal count spiked in 2022 with an average of 2,500 deals a month. Since then, deal count has mostly stabilized at around 2,000 deals a month with a slight decline between 2023 and 2024, and average volume has not dropped below 1,500 deals a month since 2020, an encouraging sign that the market is holding steady for now.
Total monthly M&A capital invested reached over $100 billion in 2024. Like deal volume, this represents a decline from 2022 levels, but represents an increase in total M&A capital invested per month in 2023. Meanwhile, monthly average capital invested per M&A deal peaked in late 2020, and has stayed steady since then, fluctuating between $40M and $80M.
IPOs
While we’re far from the busy IPO market of 2021, average deal size and capital investment remain stable. This suggests that companies are going public later in their growth cycles, waiting until they’re larger and more mature to IPO.
Monthly IPO count peaked in 2021 with an average of 400 per month. Since a precipitous drop between 2021 and 2022, the number has remained relatively stable with an average of 150 a month in 2024.
Total and average monthly capital have remained stable even while IPO count has fluctuated. With the exception of a few outlier months, average deal size has fluctuated between $75 and $200 million since 2019.