2024 showed early signs of economic recovery, following a challenging 2023 when private equity deals, fundraising and exits were all markedly down compared to the previous two years. This year, we started to see the Fed cut rates and inflation come down, contributing to more favorable market conditions.
In the private markets, deal activity increased year-over-year, with growth equity transactions comprising a significant share of new deals – validating FTV’s time-tested model. However, the performance of both the public and private markets was buoyed by a shrinking group of high-performing companies, indicating the critical need for a broader recovery.
At FTV, we’re proud that 2024 has been a year of incredible momentum and results. We saw several significant exits, notable new investments across our core specialization areas from vertical software and embedded finance, capital markets and insurtech to enterprise conversational AI and healthcare IT, and continued healthy growth across our portfolio.
Last year at this time, our team noted that AI would fuel innovation in areas such as automation, data and analytics, and customer experience. In 2025, AI agents and agent orchestration are poised to drive further breakthroughs in these areas by fully automating complex workflows and providing real-time data-driven insights that enhance strategic agility and operational efficiency.
We’re excited about what’s in store for 2025 as we continue backing leaders who are shaping the enterprise and financial technology landscape. Following our inaugural predictions roundup for 2024, we once again asked our team for their insights and expectations for the year ahead.
PRIVATE MARKETS, INVESTING AND FUNDRAISING
Brad Bernstein, managing partner
With over $1.6 trillion of NAV from fund vintages prior to 2019, a deal flow tsunami will start to unfold in 2025
Due to significant structural challenges in the IPO market, public markets have become less appealing for high-growth companies, especially small and mid-cap businesses, positioning all forms of alternative asset classes for strong volume in 2025. With massive pent-up demand for liquidity from the slowdown in investment activity over the last three years, private equity – in particular growth equity – is stepping in to fill the capital needs for companies that need to fund expansion or are seeking liquidity. In this context, we anticipate a very healthy market where investors prioritize strong fundamentals like profitability to value deals, rather than irrationally chasing and overpaying for growth as was the case in 2021.
Not all opportunities are created equal – the 2025 market can be categorized into three tiers each with different valuations and activity levels: hyper-growers, slower-growers and steady growers
Hyper-growth “unicorn-type” startups will see secondary transactions, typically at a discount, ahead of anticipated IPOs. In contrast, slower-growth businesses with sub-20% growth and weaker retention metrics and that are cash-flow negative will struggle to transact. Between these extremes are the strong and steady growers in software and tech, which will continue to attract demand and premium valuations, especially from strategic and financial sponsors.
Karen Derr Gilbert, partner
Fundraising will remain under pressure as GPs struggle to show DPI
As a result, GPs will need to prove that their differentiation is sustainable in driving top returns for investors in order to achieve their fundraising goals. In 2025, LPs will remain highly selective — consistency, distinctiveness and transparency will be critical to fundraising success in a highly competitive market.
Andy Fleischman, partner and general counsel
The first half of 2025 will be like starting an old muscle car engine after years of sitting idle
There will be some fits and starts shaking off the dust of the regulatory regimes, bureaucracy and red tape of the past four years. However, by Q3 2025, that engine should be roaring. With less regulatory friction, we might witness a resurgence in M&A and IPO activity reminiscent of the last few years of the pre-COVID era. I’m also optimistic about the possible return of the early termination option under HSR, which could accelerate the velocity of M&A deals and the timeline to closing.
VERTICAL SOFTWARE AND EMBEDDED FINANCE
Robert Anderson, partner
AI turbocharges the success of vertical SaaS and embedded finance platforms
AI is impacting all walks of life and only accelerating as we head into 2025. We expect AI and vertical SaaS and embedded finance platforms to increasingly coexist, each making the other better, as we move into a golden age of automation and insights delivered via software, data and embedded AI working together.
Adam Hallquist, principal
By 2025, embedded finance capabilities will become table-stakes for vertical software companies
As these companies integrate payments, you’ll see industries like construction and property management software increasingly integrate invoicing and on-demand financing to streamline project funding. Meanwhile, healthcare management companies will embed patient financing and other payment plans. However, more complex embedded finance solutions, such as peer-to-peer lending or models reliant on complex risk assessments, will remain nascent for now due to their specialized nature and limited broad applicability.
BANKING AND LENDING
Robert Anderson, partner
Battle over loyalty goes hyper-personal
In 2025, the battle over customer loyalty will come down to personalization. Institutions will more aggressively tailor offerings, services and products to specific end clients. However, for institutions with legacy infrastructure, this becomes incredibly difficult. Complex and outdated technology stacks will keep them in reactive mode, and we expect to see demand for greater personalization driving an exciting replacement cycle of legacy systems that benefits next-generation financial technology infrastructure providers.
CAPITAL MARKETS // ASSET AND WEALTH MANAGEMENT
Brent Fierro, partner
Explosive growth in energy and commodities data will necessitate accurate, real-time enterprise data and analytics solutions
Increased digitization, the rapid growth of renewables, market volatility driven by inflation and geopolitical conflicts, and the explosion of AI have exponentially increased the volume and complexity of data required for operational and capital markets workflows in energy and commodities businesses. These growing challenges have led to higher costs to manage data while ensuring compliance and auditability. To stay competitive and control costs, companies will continue looking for enterprise data management and analytics solutions that can aggregate, manage, analyze and utilize this data effectively (check out Zema Global!).
The institutionalization of alternative asset management will drive growth in outsourcing technology and services
AI and machine learning will rapidly improve back- and middle-office functions for alternative asset managers, leading to increased growth in outsourcing of these functions to technology and services providers who utilize technology to deliver lower total cost of ownership and increased throughput. These providers will more efficiently translate unstructured and large amounts of data into usable data layers, enabling real-time portfolio and trading/risk insights. Using this cleansed data and more scalable infrastructure will allow asset managers to add new geographies and strategies, thus accelerating their business growth.
Adam Hallquist, principal
Successful AI applications in wealthtech will focus on achieving incremental, practical wins rather than sweeping transformations
For instance, wealthtech platforms are leveraging AI to suggest personalized portfolio adjustments or automated savings plans tailored to users’ unique spending habits and income patterns, seamlessly integrating into their existing financial strategies.
IT INFRASTRUCTURE AND AI
Kapil Venkatachalam, partner
The rise of IoT devices and the need to manage remote infrastructure will continue driving a shift toward centralized asset management
With edge computing playing a growing role, organizations are now equipped to handle location-specific compute needs while maintaining central control. Connected assets—such as IoT sensors—require robust monitoring for tasks like firmware updates and battery replacements, highlighting the need for advanced asset tracking and remote management platforms.
Business-led IT transformation will accelerate with already nearly 30 percent of IT budgets being allocated by business units rather than traditional IT departments
Historically seen as a workaround for rigid IT structures, business-led IT now empowers teams to rapidly deploy tailored solutions and innovate faster. Forward-thinking IT leaders are forging stronger partnerships with business stakeholders to ensure seamless alignment with enterprise goals and to mitigate potential long-term risks.
Arun Singh, principal
As the Gen AI hype cycle continues into 2025, one additional enterprise use case will “cross the chasm,” finding product-market fit and achieving commercial success
While the tidal wave of venture capital funding for Gen AI companies has enabled vendors to evangelize markets, define new categories and test demand for novel use cases, the revenue generated by B2B Gen AI use cases has so far been concentrated in a few key areas, including code copilots, customer support and experience, and software testing. As vendors add agentic capabilities, build more workflow automation and fine-tune models to better fit vertical use cases, one additional use case will achieve escape velocity, gaining commercial traction and widespread acknowledgement as a long-term enterprise need. Likely candidates include enterprise search, healthcare decision support, legal document analysis, and sales and marketing enablement.
Marija Periša Kegel, principal
Enterprises that harness their partner ecosystems will drive outcomes faster
In 2025, enterprises will pivot from experimental AI initiatives to scalable, practical solutions that directly address pressing challenges. As enterprises move from proof-of-concept to full-scale deployment, those that harness their partner ecosystems effectively will lead the charge in driving measurable outcomes at scale.
CYBERSECURITY
Richard Liu, partner
As cyber threats and attacks grow more sophisticated, AI will play a critical role in threat detection and remediation
Cybersecurity companies will increasingly leverage AI to analyze attack patterns, automate incident responses and enhance the accuracy of threat detection. At the same time, securing AI itself will emerge as a top priority, with organizations focusing on protecting proprietary data and ensuring the integrity of AI models.
Massive opportunities will be created as analog markets shift to more technology-driven approaches
Industries with high regulatory demands, such as financial services, require frequent validation of security systems and more streamlined compliance efforts. Solutions like continuous penetration testing and automated compliance audits will rise in popularity as vendors automate parts of this value chain.
HEALTHTECH
Alex Mason, partner
With the public market not very hospitable for healthcare technology companies, scarcity of public companies will persist and both take-private and M&A activity will increase
Currently, only 16 public healthcare technology companies in the U.S. have a market cap exceeding $500 million. Additionally, there are only 11 companies trading with market caps between $500 million and $5 billion. This dearth of public companies means it will remain difficult to establish a framework for valuing healthcare technology companies. For those in the public market, expect increased take-private interest. For those sleeping giants in the public market, expect them to find new homes – these are storied names with strong franchise value but outdated technology. They will be prime targets for consolidation, divestitures and acquisitions.
AI adoption will focus on niche use cases and process innovation rather than clinical interventions
Administrative costs, which account for 20 percent of healthcare expenses, will remain a persistent burden. “Incremental automation” (versus “holistic automation”) will drive AI adoption for administrative use cases, which are largely focused on accelerating the cash cycles for payers and providers. Any success will be largely driven by reducing the friction of adoption (least amount of change management to successfully deploy and adopt) and by prioritizing small, practical wins over universal changes. The smaller the problem being solved, the more success it will have.
EDTECH AND GOVTECH
Tommy Tighe, principal
Demand will expand for experiential learning that promotes workforce skills development
The rapid evolution of the technology industry, coupled with the dynamic nature of IT systems, amplifies the demand for a workforce that can adapt to emerging tools, methodologies and challenges. As employers increasingly prioritize skills development and upskilling initiatives, they are likely to turn to vendors who offer corporate-sponsored programs that provide students and employees with opportunities to develop and refine critical competencies. For organizations to remain competitive in today’s constantly shifting landscape, it’s more paramount than ever to ensure employees have the skills necessary to continuously learn, develop and ultimately thrive.
State and local governments will address staffing shortages via cloud-based software solutions and increase investments in compliance and citizen transparency
In an era of heightened public scrutiny, agencies face mounting pressure to adopt advanced technologies, such as cloud-based solutions, to meet evolving compliance and regulatory reporting requirements. These technologies not only address operational challenges but also enhance citizen-facing communications, enabling faster, more accessible and more transparent interactions, which the public demands following a string of highly publicized law enforcement interactions. Additionally, widespread staffing shortages across government agencies are accelerating the need for software solutions that can automate workflows, improve efficiency and reduce the administrative burden on limited personnel.
HR TECH
Kapil Venkatachalam, partner
Organizations will continue to consolidate their HR tech stacks to streamline operations, reduce costs and enhance integration
Point solutions will need to demonstrate clear differentiation relative to similar functionalities in the HRIS in order to justify their costs. As a result, new consolidation opportunities will emerge in areas including employee experience, payroll and compliance, allowing organizations to adopt best-of-suite solutions rather than a proliferation of point solutions.
Organizations will center investments around single-pane-of-glass solutions that unify the employee experience
While frontline workers continue to be a point of emphasis, organizations still struggle with adoption and cultural readiness to fully realize ROI from HR tech solutions for the frontline despite their increased availability. Customers will continue to focus their investments on holistic, integrated platforms offering functionality that connects every employee population — including frontline, contingent, desked and hybrid – to keep the entire organization informed, engaged and aligned.
SUPPLY CHAIN AND PROCUREMENT
Arun Singh, principal
Ongoing risks to global supply chains will drive adoption of technologies that help enterprises identify, mitigate and remediate critical vulnerabilities
Amid persistent challenges – such as geopolitical conflicts, trade wars, cybersecurity threats, ESG compliance requirements and natural disasters — technology platforms will become indispensable tools for ensuring business continuity. Meanwhile, forward-looking supply chain leaders will leverage tools like digital twins and targeted AI applications, not just defensively but also offensively, aiming to improve margins and secure competitive advantages in an increasingly unpredictable global environment.
LEADERSHIP
Allison Walker, partner and chief talent officer
Agile leaders who demonstrate a growth mindset and humility will outperform
Whether leading the entire company or part of one, creating a vision, setting direction and driving results are hard. While all successful leaders motivate and inspire, not all leadership styles resonate effectively across stakeholder groups. Based on recent analysis across FTV portfolio companies and repeated themes we see more broadly across growth-stage companies, agile leaders who cultivate trust, approach solutions with a growth mindset and demonstrate humility are able to foster greater commitment, greater impact and more sustainable growth, outperforming their peers. Leaders who embody these qualities will also develop stronger, more resilient and adaptable teams, which are critical for managing rapid growth in a dynamic technology landscape.
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