It is great to catch up fresh with all of you in 2025! I just checked and the last time I posted was in the summer. I took a longer break from writing than anticipated--not because I did not feel like it, but because I had a ton of stuff coming at me in H2 and did not feel like I could give it the attention it deserved for this community.

Of course, I used the opportunity to try all kinds of AI agents. There a great assistants out there. Much has been integrated with legacy software, and tools are getting better fast. But when it comes to creative tasks, they, well, mostly assist. They can't cope with the hardest part: shaping high-value and differentiated content. Don’t get me wrong--I am extremely about AI agents (healthcare, coding, finance, etc.). The impact is real, and big, often in . We are also witnessing incredible productivity gains across our portfolio already today (but more on this in an upcoming post…). The core of creative tasks, however, can simply not be outsourced, and perhaps never can be... All this to say that I enjoy writing and will continue doing so for a long time…

One of the topics I have spent a considerable amount of time on these last months is to think through the future of our industry. We go through this exercise as a firm every decade or so, to ensure we continuously innovate to continue winning over the long term. Today, I think we are at an exciting turning point in the history of venture capital. Just like any other, more mature, private asset class in the past, our young industry has a unique opportunity to ‘grow up’ and will see a lot of innovation in the next five years.

Liquidity has been the name of the game

Liquidity's been the key focus for the past 2 years, and I expect it to stay that way for another year or two. Last year, the deal and IPO slump went on, and private equity payouts fell 50% short. that PE funds had fallen about $400bn short in distributions to their investors over the past three years compared with historical averages…

Many firms got creative and made increasing use of so-called continuation funds. Basically, one fund sells stakes in portfolio companies to another fund of the same firm, backed by the same and/or new investors. It's a clever and efficient way to create exits in the short term. But in the long run, it just covers up deeper issues and isn't really a ‘fix’ for many investors.

Naturally, liquidity was also a big focus for our team this year. I am proud to say that we reached our target of returning more than €100m in cash to our investors in 2024 alone... And we have observed that things will improve further in the next one to two years.

Last year, we had M&A activity picking up slowly in our portfolio with several exits,  being the most prominent one. Interestingly, 2025 is already off to a great start, with one more exit done, and several more potential M&A deals in their early innings.

The public market trend has also been more positive again this year with finally some broadening of the gains, but the picture is not ideal yet (see pic above). , US stocks soared in 2024, for the second year in a row. But the magnificent 7 continued to drive most of the gains. The question still remains when these gains will fully trickle down to the small and mid-cap companies, the best proxy for late-stage private markets and broader M&A activity from publicly listed companies. The few tech companies that took the IPO jump over the last 18 months, such as Instacart or Klaviyo, are shining examples as their share price has risen significantly since their stock market debuts.

So, while confidence is coming back, the question is now how quickly. From some chats I’ve had lately, bankers seem to be also gearing up for an initial revival in IPOs. While I expect the large blockbuster IPOs of the largest private companies to hold off for a bit longer, we hopefully see a few solid IPOs this year. I think we need a bit more than a handful of them for the market to be fully ‘back.’

Finally, activity is also coming back to the growth stage market. While 2024 has been a particularly strong year for our portfolio (and not too distorted by the AI hype 😉), this outperformance is also the result of us spending consistent time helping our companies find the right follow-on investors. While (yet), many great investors have similar feedback. So, I think this evolution shows, directionally, where the market is heading, especially for the stronger companies out there. While 2022 and 2023 have been on a downward trend, 2024 feels like a turning point for venture capital funding.

All in all, things are heading in the right direction, and /26, and with it, should get back into the market.

An innovation tsunami is about to hit our shores

While liquidity was one of the big topics of 2024, here is another chart I used a couple of times this year. We can debate the impact of each technology category, but that’s not the point. The trend for the future is clear: The impact of innovation in the next two decades will be larger and more distributed across technologies and geographies than anything we have witnessed before.

‘The mix of technologies we are witnessing couldn't be more fascinating, from new interfaces, new core technologies, scientific advances to massive societal trends.’ This is , and I double down on it today--probably the most potent cocktail of innovation this world has seen is about to hit in the next decade. Today, I am seeing not only exceptional startups in industries that have not or little been touched by software to this day but also players that are moving faster and twice as efficiently than the tech players with products from not 10 or 20, but five years ago…

To avoid missing out,  change by raising larger and larger funds. They essentially use the same old 'tactics' to throw more capital and manpower at the trend. But we know how this ends in venture. Others focus more and more on theme-driven strategies, thereby increasing the risk of missing out substantially over time. Both strategies can work, but I doubt they will do so consistently... The reason is that focus on the more fundamental opportunities our young industry has around liquidity management and performance consistency, coupled with an evergrowing innovation impact.

The reason is that few are focusing on the more fundamental opportunities that our young industry offers in terms of liquidity management and performance consistency, all against a backdrop of increasing impact from innovation.

An exciting 2025/26 ahead of us

Coming out of 2024, there are many things to be excited about. While the last years have been a challenging time for startups, the great thing about working in tech is that there are always new problems to solve, new markets to create, new products to ship, and new . And, now more than ever, if you ask me. Macro events don’t change that. So focus yourself and your team on building and shipping those cool things, get some wins, and move forward with positive energy. It will be infectious, and the market will be ready for you.

I spent the week after Christmas with friends and family in the Swiss mountains. Holidays are different, but great with a toddler. Let's see how it goes with two of them... 2025, here we come!

Life is awesome,

Yannick

*Yannick Oswald is a partner at the European venture capital firm Mangrove Capital Partners, best known for its investments in companies such as Wix, Skype, Walkme and K Health. Oswald supports tech startups across Europe and sits on the board of some of Europe's biggest tech startups, such as Flo Health, Sifflet and Red Points. In 2020, he launched his blog, with the tagline Opportunities Everywhere, which has become Europe’s most-read VC blog and a key resource for tech entrepreneurs across the continent. He publishes one article a month, usually on a topic related to venture capital and technology entrepreneurship. Yannick grew up in Luxembourg City, has worked in several European countries and the United States, and qualified as a commercial engineer in Belgium and Argentina.

Republished with permission from the .