State of the Markets

H2 2025
SVB’s Innovation Economy Outlook

Key Takeaways

After a period of cost cutting, headcount reductions and painful austerity measures, company operations appear to have reached a new stable equilibrium. Still, founders are navigating market volatility caused by macroeconomic uncertainty, even as they continue to adapt to the recalibrated innovation economy. Against this backdrop, AI remains the driving force of US venture capital investment.

Link to Adobe

Get the report

Link to Adobe

$5 - Amount burned by the median Series A AI company to gain $1 of revenue.

Burn multiples for AI companies are higher than other sectors, suggesting low-cost capital could be fueling inefficient growth.

10 - The number of US VC-backed tech IPOs in the first half of 2025.

With the IPO window finally cracking open, it appears pent-up demand from investors will drive continued activity through the back half of the year — provided the market avoids shakeups due to significant macro events.

1/3 - The portion of US VC investment from deals with the six largest funds.

The increase from 10% in the period ending in November 2024 was driven almost exclusively by massive AI deals.

Read the full State of the Markets Report

Get the context behind the emerging trends shaping the innovation economy.

Link to Adobe

Get the report

Link to Adobe

AI companies don’t necessarily run efficiently

Notes: Data reflects medians since 2022. AI is defined as companies leveraging AI or building AI products and services. Leverages PitchBook Data, Inc.’s AI vertical definition.

Source: PitchBook Data, Inc. and SVB proprietary data and analysis.

Revenue per employee is higher for non-AI companies than for AI companies, despite AI’s promise of efficiency.

Because AI companies have significant deal size and valuation premiums, they have a relatively low cost of capital — so they tend to hire more employees and operate less efficiently.

UNICORNS

Can unicorns find the exit?

Notes: Data for the last 12 months ending 6/30/2025.

Source: PitchBook Data, Inc., S&P Capital IQ and SVB proprietary data and analysis.

While 72% of tech unicorns are growing year on year, only 21% of them are turning a profit.

Assuming $300M in revenue is the benchmark for a successful large tech IPO, 25% of unicorns could be ready to head for the public market. But only 5% also achieve the “rule of 40” benchmark, which combines revenue growth and profit margin.

TECH TRENDS

AI and defense are hot podcast topics

Notes: 1) The podcast sentiment index tracks the tone of 3,200 podcast episodes using FinBERT, a financial sentiment model. Topic mentions are based on keyword frequency across the same sample using a three-month moving average.

Source: RSS feeds of podcasts, OpenAI Whisper transcriber, FinBERT (ProsusAI) and SVB analysis.

Per SVB’s new Podcast Sentiment Index, AI and defense are high on the list of hot topics among VC firms. This first-of-its-kind index draws from 3,200 venture podcast episodes.

Podcasts offer a way to track emerging trends and identify key inflection points. For example, sentiment around AI rose sharply after ChatGPT was released and the momentum continues. Meanwhile, defense received a huge boost after Republicans swept the US elections.