Summary
2025 will be another transformative year for technology and culture, with advancements in AI and computing dominating the landscape. Against the backdrop of this continuing AI revolution, we anticipate several other technology and industry areas will see outsized interest and investment. These tailwinds in innovation and capital create new opportunities but also highlight potential gaps in the early-stage support ecosystem. This article draws on exclusive insights from several members of the OneValley team, including Chief Product Officer Alec Wright, Managing Director of OneValley Ventures Juan Scarlett, and VP of Impact Alex Fang. It highlights key trends driving innovation and investment opportunities in the year ahead.
TLDR:
AI Agents deployed for focused, high-value work tasks will be the driving force for new startup creation and early-stage investment this year. The expanding AI frenzy will continue to suck the oxygen out of the room for early-stage non-AI companies that are recruiting or fundraising.
Geo(political) dynamics and a maturing group of $1B+ growth-stage Defense Tech startups will expand investment and opportunities for companies building for defense, security, and public safety.
There is a need for new energy generation and infrastructure technology due to unprecedented energy demand. AI and the data centers that power it are driving expanded electricity use. There will be a wave of technologies purpose-built for generating, storing, and managing the unique energy needs of an AI-first world.
Early-stage accelerators, universities, and other entrepreneurial support ecosystems should further develop resources focused on these innovation areas, including industry mentorship networks, strategic technology partnerships, and access to high-value pilot facilities.
AI Agents - building on the success of generative AI
2024 was the Year of AI. It appears the same will be true for 2025. We are at an inflection point in AI interest, with generative AI breaking through after years of relatively flat AI adoption. By mid-2024 72% of organizations were reporting some use of AI and 65% were reporting use of generative AI.
If generative AI was the star of 2023 and 2024, we expect AI Agents to attract disproportionate attention and interest in 2025. AI agents, software applications designed to take actions independent of user input and interact with the physical and digital world, represent a significant leap in automation and the most compelling venture creation area for the coming year.
Agents move AI beyond language and content creation and into executing intricate workflows like processing insurance claims, diagnosing IT system errors, or coordinating supply chains. For instance, OneValley Ventures portfolio company IrisMed employs AI agents to process and negotiate insurance claims for medical practices. The IrisMed platform has demonstrated its potential to streamline operations, reduce costs, and increase reimbursements. Pump, another OneValley portfolio company, uses AI to constantly monitor and optimize technology companies’ cloud environments, saving their startup customers millions on AWS and GCP bills.
OneValley’s Chief Product Officer, Alec Wright, explains:
“AI agents are wave two. Unlike generative AI which requires ongoing user inputs and interventions to create value, agents act on behalf of users and can handle complex workflows from end-to-end. Soon everyone will have their own agent booking flights, managing bills, applying for jobs, and supporting them in a nearly unlimited number of other tasks. Generative AI adoption exploded overnight due to the launch of ChatGPT, which provided an accessible, instantly valuable experience that crystallized the opportunity of GenAI for consumers and enterprises. The big question is, will AI agents have a ChatGPT moment this year?”
AI agents represent an incredibly powerful opportunity for founders. There are thousands of businesses to be built applying AI agents and generative AI to focused use cases where agents can manage specialized workflows for a business or consumers. We believe 2025 will be the year of Agents for “X”, and it will take some time to see which workflows are most ripe for disruption and where the first generation of large, venture-backed AI agent companies will emerge.
Defense Tech - Building for Security, Space, and Safety is Cool Again
Advancements in defense technology are critical to maintaining national security and technological leadership. Companies building for the defense and intelligence agencies have long been shunned by the venture capital ecosystem due to long sales cycles, challenges in predictably scaling revenues and subscale exit outcomes. This thinking has started to change, driven first by the engineering feats of SpaceX and the continued success of Palantir. Today, Anduril’s rapid ascent as a leading defense supplier across multiple categories and a growing group of growth-stage companies taking on national security challenges have completely upended this mindset.
In 2025, we anticipate a wave of AI-driven software and hardware solutions will reshape the defense and security landscape. While Palantir was the sole startup to emerge from the first generation of digital Defense Tech, the new generation includes an entire ecosystem of $1B+ private companies focusing on automating and securing our defense capability.
There is an even larger group of companies across a variety of verticals at the expansion stage that will likely join the community of $1B+ Defense Tech in 2025 and 2026. This includes Stoke Space (making reusable rockets) which raised $260M this week and Hadrian (developing automated manufacturing) which is backed by Founders Fund and Andreessen Horowitz. Both firms have led the recent wave of Defense Tech investment, and A16Z has gone as far as to develop the moniker of “American Dynamism” for companies building with a focus on defense and critical industries.
We anticipate the attention and investment these companies have attracted will begin to trickle down to the early-stage ecosystem, with increasing early-stage funding and resources focused on companies building for defense and security. This opportunity goes beyond military use cases and includes new solutions for intelligence, policing, and public safety. For example, Zensors (a OneValley portfolio company) is building AI for the physical world using computer vision systems and AI-powered agents to manage critical facilities like airports and train terminals. This emerging frontier includes companies working on technologies like autonomous systems, advanced AI & ML, Communications Infrastructure, Cyber Security, and Advanced Manufacturing and applying these technologies to every part of the defense and public safety apparatus.
Energy Demand and Infrastructure - the Era of Flat Demand is Over
Renewable energy and energy infrastructure technology are set to make tremendous strides despite uncertainty surrounding the incoming presidential administration’s position on climate. This progress, however, will likely be driven more by commercial necessity and opportunity than climate concerns. The explanation is simple: AI, Crypto, and Electrification are driving unprecedented demand for electricity.
Electricity demand in the United States has stayed relatively flat for the last 15 years. The US Energy Information Administration (EIA) now projects that domestic energy demand will grow ~2% per year from 2022 to 2026. While 2% may not seem like a large annual increase, this represents ~450 billion kWh of new demand by 2026. This is the equivalent of adding over 43 million new households to the US grid, or about 30% of our entire housing supply!
Fortunately, renewable energy sources will likely supply a majority of this increased demand. Since 2016, wind and solar have provided the cheapest source of electricity and their levelized cost has fallen another 50% since then. Renewables adoption will continue accelerating, and the EIA forecasts that renewables' share of energy generated in the US will grow from 14% in 2016 to 32% in 2026.
While there are many factors responsible for the end of The Era of Flat Demand, data centers, and their associated energy needs will be the largest drivers. There is an unprecedented mismatch of data center supply and demand due to the raw computing power needed to power the AI revolution described above. Today, data centers are breaking ground in every corner of the country. They are often clustered in hubs, chasing cheap real estate and electricity (above all else). Just this week, the Stargate Project was announced with commitments from Oracle, Softbank, and OpenAI to each invest $100B in US data centers. This data demand will create a wave of opportunities for companies building software and hardware solutions to meet the unique energy generation, storage, and management needs of data centers.
This will create opportunities across a variety of energy verticals, including grid interconnection, microgrids and virtual power plants, both short and long-duration energy storage, intelligent energy management systems, and of course, high-density energy generation.
As of 2022, there were only four small nuclear reactors in commercial operation: two in Russia and two in China. However, due to the forecasted increase in electricity demand from AI data centers, there has been a surge of interest in scaling SMRs to produce large amounts of on-demand, low-carbon electricity. Tech giants like Microsoft and OpenAI, and 3rd party data center operators like Switch, have made significant investments in SMRs. They are working to re-open legacy nuclear plants and are partnering with emerging nuclear startups like Oklo (liquid metal/HALEU fuel), X-Energy (helium/TRISO fuel), and Kairos (fluoride salt/TRISO fuel). As of 2025, it is estimated that over 80 SMRs are in development for commercial deployment over the next ten years. This will hopefully fuel an expanding nuclear technology ecosystem, and your house may be powered by an SMR sooner than you think.
The Opportunity for Accelerators, Universities, and other ESOs - Building a Support Ecosystem for These Emerging Verticals.
Many Entrepreneurship Support Organizations (accelerators, incubators, university programs, NGOs, etc.) don’t currently have resources focused on early-stage founders building in these areas. Unfortunately, the needs of these startups are often quite unique. For example, early-stage AI agent companies will incur massive compute and AI model costs that are orders of magnitude greater than traditional SaaS businesses. Having the right technology partners from Day 1 can make all the difference. Founders building for defense and energy need to navigate complex government regulations and bureaucracies while applying for multiple government grants across the DOD, DOE, NSF, etc. This is literally “rocket science” compared to many other industries.
ESOs have an incredible opportunity to accelerate the startups already building in these spaces, as well as inspire more entrepreneurs to pursue innovating in less traditional markets like Defense Tech and Energy & Infrastructure. Developing these resources can help “bridge the gap”, and ensure entrepreneurs in your community and programs have the tools needed to innovate in today’s most promising markets. While the breadth of resources may seem daunting, organizations like OneValley have already aggregated many of the resources needed to support founders in these spaces, including computing partners like AWS, Azure, and Digital Ocean in OV Perks and tools to help founders navigate the government grants ecosystem. Reach out to the OneValley partnerships team if you want to learn more about accessing these and other OneValley resources for your startup community.
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