2025 Market Trends Report
-- by Jessie Gabriel
It’s been a strange year. We have a new administration that has (among other things) injected unprecedented uncertainty and instability into the markets (and our lives). In LA, the year started with the devastating Eaton and Palisades fires, which destroyed the homes and damaged the lives of thousands of Angelenos. Then there are the private markets, which have been marked by extreme highs (AI) and lows (everything else). From working alongside and opposite over one hundred companies and funds this year, here are some things we’ve seen and heard from GPs and entrepreneurs.
Liquidity, WTF? Uncomfortable conversations with fund investors have been a hallmark of 2025. We’re raising a new fund! Great. How much can you invest?Well, we haven’t received distributions since 2020. Oh, but we can’t do anything about that. Neither can we. Right.
Flat Funds. This liquidity squeeze has resulted in an unusually high number of flat funds. While most fund managers look to grow their fund size, many have closed their subsequent fund at or below the immediately preceding vintage. Some managers have really leaned into this—explaining how this may not be an entirely bad thing, depending on the strategy. It’s caused more LPs to question: do all strategies scale?
Fund II does not guarantee Fund III. The chat in the emerging managers groups used to be that Fund I was the hardest, things got a little easier with Fund II, and Fund III was a relative breeze. That may have been true when LPs were receiving regular distributions from the first two funds, but not so much now. We’ve seen a number of managers who successfully closed significant Fund IIs pivot to SPVs in the short-term, with some considering moving away from blind pool funds altogether.
The rise of experiential. While we have swung sharply towards digital and automation, this has been counterbalanced (to a small degree, but still) with a thirst for true human experiences. People want to be a part of a real community, they want to be reminded of their humanity, they don’t want to interact with another *^(%(^*& chatbot. We’ve seen more companies pitching products that have what we would describe as experiential components, which is exciting.
Unless you love everybody, you can’t sell anybody. Ironically, some of the worst customer service is provided by “service” firms. Law firms, PR firms, and accountants (to name but a few), all have terrible reputations when it comes to the client experience. Providing an exceptional client experience is one of our primary values at All Places. And what we are learning is that we’re not alone! Over the last year, I’ve met a number of entrepreneurs (mostly women) who are running boutique service firms and who are similarly obsessed with customer service. In case you are wracking your brain on the quote: Jerry Maguire.
AI or die. We’ve all seen a ton of articles with titles reminding us that, if you're not using AI, you're essentially receding into the ether. I wouldn’t go that far. But I would say this: there are tools out there now that can provide an incredibly high amount of value for a relatively low cost. If you’re not thoughtfully exploring and selectively implementing AI-based tools, you’re doing your business a disservice. And for all those antiquated behemoths out there that are too big or lack the motivation or lack the leadership to aggressively pursue this path, on behalf of my fellow young, agile businesses out there, we’re coming for you.
You still have to put in the work. At the same time, like all high value things, you have to work hard for it. The times I’ve gotten the most out of AI have been when I’ve devoted sustained, focused time to working with the tool to iterate on and refine a project. Lazy thinking is lazy thinking. If you leave your hard work to ChatGPT, the quality of your work (and your development as a company) is going to suffer. It’s a relationship, people. You have to put in the work.
AI cannot replace genuine creativity. AI is not going to create a unique and special marketing strategy or a gorgeous brand that is going to give people chills, or explain how to bring the right emotional intelligence to deal negotiations. AI is not going to create a unique and special anything. It is designed to deviate to the mean.
Or an encyclopedia. Okay, that’s kitschy for impact. I still remember the Encyclopedia Brittanica that filled the shelves of a small bookcase at my grandparents’ house in Long Beach. They were so cool. They may not be cool now (or maybe they are . . . I never expected 90s fashion to come back either), but at least they had real facts in them (I hope). ChatGPT is not for facts. It’s told me soooo many things that sound good, but are not true. And when I point this out, it gives that always satisfying answer: You’re right! Thanks so much for pointing that out! Uh . . . wasn’t that your job? No, it's not.
While much of this sounds like bad news, it’s also causing us to rethink some things that we’ve taken as givens. Just because things have operated in one way for a long time doesn’t mean that is the best way for them to operate indefinitely. For better or worse, we’re in a full-blown period of disruption. Again.
On that note . . . I was at dinner last night with a close friend who pointed out that this will be the first holidays for people who lost their homes in January. I am ashamed to say this had not occurred to me. This will also be the first holidays many people are experiencing without loved ones who have been targeted by immigration authorities. If you have a chance to give a little extra love to someone who might be really going through it over the next few weeks, do it. Because a savvy LLM is not, and never will be, a substitute for the magic of genuine human care and connection (and cookies).
