Business Blog: Crystal Ball sector spotlights

Presented by HSBC

The Crystal Ball: What 2025 holds for pivotal sectors, including crypto, consumer, and health

January 2, 2025

Happy New Year! In our first Term Sheet of 2025, we continue with our Crystal Ball series in which we've surveyed readers about what's on the horizon for private markets and tech. The feedback from all of you has been incredible, and today we'll be digging into specific sectors.

Though some truths are constant, each sector has its own pressures and questions: Can fintech make a comeback? Is consumer looking at a banger year or will it slog along? How will a growing threat landscape bolster (and challenge) cybersecurity? And, of course, how high will crypto fly, or how soon will it hit turbulence again?

Here's what you think 2025 holds for some of the most prominent sectors in the private markets—and what just might emerge as the next big thing. Let's jump in!

Note: Many answers have been edited for clarity and/or brevity.

The Term Sheet deals section will return on January 3.

Fintech: Turning point

Fintech will reemerge as a hot category with continued positive momentum in multiples and a resurgence in private market deals. —Steve Sloane, partner, Menlo Ventures

Fintech will see a resurgence after IPOs from companies like Stripe, Klarna, Chime, and Plaid. VC funding in fintechs cooled after the bubble of 2021, but once these big players go public, we'll see renewed investment in the space. —Mercury CEO Immad Akhund

2025 will see a greater focus on lending BaaS and embedded finance. —Adam Shapiro, partner and cofounder, Klaros Group

Digital banks and wallets are making a comeback, already presenting stiff competition for traditional or legacy financial institutions worldwide, but this year, we will see digital banks outpace them in new customer acquisition. —AstroPay CEO Marc Sacal

Cybersecurity: Growing risks—and opportunities

2025 will be a transformative year for AI-driven cybersecurity investments, particularly in startups that strive to revolutionize and automate traditionally manual, time-consuming security processes. —Ofer Schreiber, senior partner, YL Ventures

As cyber threats and workloads have grown significantly in recent years, many security leaders have faced a choice: Either continuously expand their cybersecurity teams or reduce workloads by focusing only on the most critical issues….As a result, we anticipate a growing adoption of "virtual employees"—AI agents that continuously learn from human work and gradually take on some of the manual tasks currently performed by employees. —Amit Karp and Yael Schiff, partner and vice president, Bessemer Venture Partners

Within the field of cybersecurity, we will see AI agents become the new SOC (security operation center) analysts—tireless coworkers who never sleep, sift through the noise, and flag what matters so humans can focus on what's next. —James Luo, partner, CapitalG

We'll see the rise of AI-driven threats in open source. In 2025, open source software threats will shift from traditional vulnerabilities to AI-generated backdoors and malware embedded in open source packages. —Idan Plotnik, cofounder and CEO, Apiiro

2025 will be a year marked by further consolidation within the cybersecurity market, driven largely by a shift toward platformization. Organizations are increasingly demanding integrated, comprehensive solutions rather than disparate security products and this is reshaping the industry. —Arctic Wolf CEO Nick Schneider

AI typically automates tasks that entry-level employees tend to have and that prevents those employees from getting the skills they need to move into other roles—it's going to exacerbate the existing cybersecurity talent shortage. —Itai Tevet, CEO and cofounder, Intezer

Deepfake attacks will increasingly make headlines in 2025 and enterprises will begin allocating budget to thwart the threat vector. —Dave Zilberman, general partner, Norwest Venture Partners

Crypto: Going up

Bitcoin will hit $200,000 in 2025 as institutional investors fuel the next wave of adoption. —Anthony Scaramucci, founder and managing partner, SkyBridge Capital

Crypto will reach new pricing levels, Solana will close the gap on Ethereum, and the launch of the AI-generated meme coins driven by the community will unlock an unprecedented number of consumer wallets. —Carter Reum, cofounder and partner, M13

Today's market doesn't make sense. While Bitcoin may see a short-term run-up of 20-30% in the next few weeks, I wouldn't be surprised by a sharp pullback by the end of the year or early Q1. —Anthony Georgiades, general partner, Innovating Capital

The Stripe-Bridge deal has underscored the rising role of stablecoins in payments and commerce. Expect more significant funding announcements in this space driven by real-world, cross-border use cases and increasing transaction volumes. —Dan Rosen, partner, Commerce Ventures

2025 will be the year of the stablecoin. —Shivani Siroya, CEO and founder of Tala

2025 will mark crypto's decisive break from its “complexity cult,” where difficult user experiences were worn as badges of honor. This transformation will be driven by market necessity, as the industry realizes that it can no longer sustain itself by recycling capital between insiders. —Overclock Labs CFO Cheng Wang

Crypto venture funding is set to rise significantly, driven by specialized crypto funds, generalist venture capitalists, and a surge of new startups focusing on crypto and AI. —Tekin Salimi, founder, dao5

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Health: Precision and personalization

The next herd of unicorns will be in healthcare. 2025 will mint and see the founding of the next generation of billion-dollar healthcare companies. With rising consumer demand and an overburdened healthcare system, startups offering preventative care, RPM, and embedded healthcare services will become huge. —Ryan Mendoza, partner, Scrum Ventures

2025 will change how we approach brain health. There will be the creation of "Oura for brain," offering a brain score to track cognitive performance. Brain tracking will be as commonplace as tracking physical fitness. —Masha Bucher, founder and general partner, Day One Ventures

Precision medicine is getting personal, with treatments so tailored they can potentially target individual cells, making the dream of customized healthcare a reality. Healthcare technology startups leveraging AI and machine learning for personalized medicine and drug discovery will be prime targets for VC funding. —Christine Hong, investment manager, Techstars

2025 will be the year of personalized health data. For women, this shift is especially significant. Hormonal data will empower users to optimize fertility, mental health, and physical performance in real time. —Assia Grazioli-Venier, founding partner, Muse Capital

We see significant value in specialized behavioral health companies targeting high-acuity conditions within specific demographics. This marks a shift from earlier investments in generalist mental health models. —Lexi Henkel, principal, Maverick Ventures

Consumer: Bounce back

We're in a consumer AI renaissance, but the paradigm feels fundamentally misplaced. Right now, the conversation is dominated by efficiency; tools engineered to track metrics, streamline workflows, and maximize productivity. But let's be honest: this utilitarian obsession isn't what made consumer tech iconic. The most revolutionary moments in consumer history Facebook, Snapchat, Pinterest, the iPhone) were never about function alone. They were about serendipity, enchantment, and the almost surreal sensation of 'This shouldn't exist, but it does.' We should be building tech that evokes the sublime, that feels like it belongs in the year 3000. Because if technology doesn't leave us feeling a little awestruck, what's the point? —Zehra Naqvi, consumer investor, Headline

We expect that the beauty sector will continue to be attractive for investments. Consumers may view certain beauty services as discretionary in a challenging economy. However, beauty products—including premium-priced products—are prioritized by consumers. —Colin Welch, managing director, head of New York and London offices, TSG Consumer Partners

Funding will favor experiential tech and wellness startups that improve quality of life, as well as prosumer tools that leverage AI. —C.C. Gong, principal, Menlo Ventures

Consumer brand and CPG investing will come back into vogue, but it won't look as it did a decade ago. —Shamin Walsh, managing director, BAM Ventures

In 2025, dead retail spaces will accelerate conversion into experiential and social entertainment venues as Gen Z and young millennial families seek more engaging and tasty screen-free activities. —Alex Rosenthal, director, Verlinvest

In a world that's increasingly divided, companies with a mission to bring people together and foster community are making a comeback. The consumer market is rebounding—but with a fresh perspective. —Nextdoor CEO Nirav Tolia

Ecommerce has transformed the way that consumers are shopping and offers companies a level playing field. This will continue to be advantageous for smaller companies that are competing in the big leagues. —Chuck Esserman, CEO and founder, TSG Consumer Partners

Sectors to watch: Quantum computing, robotics, and beyond

2025 could be a year of awakening for quantum computing as more awareness emerges around its potential to deliver positive impacts across vast applications. —Morgan Mahlock, director, Cerberus Ventures

If 2024 was the year of LLMs, 2025 will be the year of robotics. As AI advances enable robots to move from structured, repetitive tasks to more complex and dynamic real-world applications, we'll see rapid progress in robotic perception, manipulation, and decision-making capabilities. —Yuri Lee, partner, IVP

Startups addressing economic mobility will continue to attract attention and funding. Areas ripe for growth include AI-driven upskilling and job placement tools. —Keith Camhi, managing director, Techstars

2025 will be the year of hardware. Expect big announcements from "smaller" hardware companies working on the components driving these new AI systems to outpace Big Tech giants. —Van Jones, deal lead, Wellington Access Ventures at Wellington Management

Robots will find their purpose as they redefine existing industries and create entirely new ones. —Bruce Leak, founding partner, Playground Global

2021-2022 saw a boom in climate tech investing, resulting in a wave of early-stage investments. As these startups mature to pilot demonstration and commercial scale, we will likely see a darwin-esque fight for survival in 2025 as later stage investors become less risk taking. —Alex Prather, director of ventures, Newlab

Startups addressing economic mobility will continue to attract attention and funding. Areas ripe for growth include AI-driven upskilling and job placement tools. —Keith Camhi, managing director, Techstars

2025 will bring with it a further acceleration of defense tech funding as the DoD increases its pace of buying and deploying startup technologies. —Jai Das, president and partner, Sapphire Ventures

See you tomorrow,

Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
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