This editorial appeared in the December 5th, 2024, issue of the Topline newsletter.
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If you boil all our jobs down to the core, one thing becomes clear: we’re all responsible for allocating resources effectively. Sounds simple, but in reality it’s anything but.
One thing that’s helped me is staying plugged into what’s happening around me. In today’s ecosystem, with data and insights everywhere, this is easier than ever—provided you can cut through the noise to find the signal.
With that in mind, I’m switching things up today. Instead of the usual snappy editorial, I’m introducing a new format: The Topline Market Snapshot.
Every quarter, I’ll highlight a handful of the most important charts shaping our ecosystem, unpack their implications, and take a stab at what they mean for the road ahead. The goal? To help you separate signal from noise.
Let’s dive in.
Chart 1: The venture market has stabilized
Venture’s “new normal” feels a lot like the old one—back when things were steady and sane before the 2020 hype train went off the rails. Deal counts and cash raised are back to pre-2020 levels, and after a brutal 2023, terms are swinging founder-friendly again. But this isn’t just a reset to the past. The rules have changed. Case in point: down rounds now average double what they did in the good old days.
So, what’s next?
The optimists have a solid take: if the IPO backlog clears in 2025, liquidity flows back into the market, and the downstream effect could be more deals and cash deployed. Layer in AI—which makes building cheaper and faster—and suddenly more startups look like solid bets. More deals, more cash, more velocity. Not back to 2020-2021, but a lift from where we are today.
But here’s the twist. AI’s efficiency could also shrink the venture pie. If startups need less capital to build and scale, the venture cash machine could get leaner—and the game could shift in ways we’re only beginning to understand.
So, the venture market has definitely stabilized, but whether it grows from here or evolves into a leaner version remains to be seen.
Chart 2: 2024 was the year of M&A
At the end of 2023, Sam predicted that 2024 would be the year of M&A—and he was spot on. Q3 2024 was the busiest quarter for tech M&A since 2019, with only the frenzy of Q1 and Q2 2022 outpacing it.
With the IPO window shut, M&A became the go-to avenue for liquidity and soft landings. But let’s be clear: 2024 was very much a buyer’s market. Depressed valuations meant companies were getting acquired, but their sellers weren’t exactly walking away with champagne-worthy exits. If multiples and valuations improve in 2025, we might finally see sellers flashing bigger post-deal smiles than they have in the past two years.
One notable gap in the M&A landscape, however, has been the absence of big tech snapping up companies. The reason? A Wrath of Khan. Her tenure at the FTC has put the brakes on large-scale tech acquisitions. But with a government change incoming in January, her exit seems likely. A shift at the FTC could open the door for big tech to re-enter the acquisition game.
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Chart 3: Public multiples are rising 
The “IPO window” slammed shut in 2022, thanks to depressed public multiples driven by historic interest rate hikes and a tough macro environment. IPOs paused, liquidity dried up, and our ecosystem has been parched ever since.
Now, there is a glimmer of hope. Interest rates are easing, the macro environment is steadying, and public tech multiples—especially for high-growth players—are ticking upward. If this momentum holds, 2025 could see IPO-ready tech firms finally take the plunge, quenching the market with much-needed liquidity.
Public multiples ripple through everything—venture valuations, M&A, and the general sentiment. A healthy public market in 2025 could mean brighter days for private markets too. The real litmus test? Klarna and ServiceTitan. These IPOs will set the tone for what 2025 will look and feel like by year’s end. Keep your eyes on them—because what happens here will shape what follows.
Chart 4: The IPO backlog is of high quality
In 2013, the world had just 39 unicorns. By 2024, that number had skyrocketed to 532—a staggering 14x increase. Since the downturn began, much has been made of “ZIRPcorns”—companies that hit unicorn valuations during the 2020-2022 frenzy but don’t hold up under today’s scrutiny.
There’s some truth to that narrative, but here’s the other side: we now have as many $10B+ companies in the private markets as we do in the public markets, and many of them are growing faster than their public counterparts. These aren’t just paper unicorns—they’re real businesses with real revenue and impressive growth. By any measure, they’re legitimate $10B+ companies.
If Klarna and ServiceTitan deliver strong IPOs, expect many of these private giants to line up for their moment on the public stage.
That said, not every company that once would have rushed to go public will take the leap. The private markets have evolved. High-quality late-stage companies can now raise substantial capital without going public—something unheard of pre-2020.
So, 2025 could bring much-needed liquidity to the market, but it will also tell us something deeper: which companies choose to go public—and why—and which decide to stay private—and why.
What a ride it’s been since 2020. We’ve all learned lessons, developed skills, and earned our scars along the way. As we close out 2024, I feel confident saying the worst is behind us. Economies are cyclical by nature, and while downturns are part of the game, they always end. What follows is a period of stability and growth.
2024 brought much-needed stabilization, and 2025 looks poised for a return to growth. That doesn’t mean it will be smooth sailing for everyone, but for those solving important problems with focus and discipline, 2025 can be a great year.
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