Welcome to French Tech Updates! Your weekly source of startup, VC, and tech news and insights. I’m James, a startup-obsessed American living in Paris.

New year, new investment theses 🎉

Perhaps a more accurate title for this post would be “what VCs say they are looking for in 2025.” From my experience on both sides of the table there are always hot themes, but good investors are always ready to back great teams—regardless of if their website ends in “.ai” or not.

On that note, several of the themes below came from Y Combinator’s twice-a-year “request for startups.” An interesting exercise for another time would be to see how closely the companies accepted into each batch actually align with those requests. My bet is there are plenty of outliers.

That said, it’s still interesting to see where investors think the opportunities are, whether you’re building a company, looking for a job, or searching for your next investment. While AI is mentioned plenty of times, so are hardware, B2G, and several other categories I didn’t expect to see on this list.

So, with that, let’s jump into this last special edition post before returning to our regular content next week!

12 areas VCs want to invest in 2025

1. 🤖 AI and Vertical AI for Enterprise Automation

This category operates on the widely accepted idea that AI copilots, automation tools, and agents will transform many jobs and enterprise systems by eliminating repetitive tasks. Industries such as sales, government, compliance, and finance will shift to AI-powered productivity and a new batch of companies will be formed to fill these needs. The focus here is mostly on Agents to perform tasks an vertical search to provide highly specialized answers.

Sources: Harj Taggar (YC), James da Costa (a16z), Angela Strange (a16z)​, Alex Immerman (a16z).

2. ⚒️ Manufacturing Companies Driven by Robotics and AI

AI and ML-based robotics have the potential to reduce labor costs and enable the return of manufacturing in Europe and the U.S. Companies are also more likely embrace domestic production for its geopolitical resilience and technological independence (especially in the face of Donald Trump’s re-election, war in Europe, and lingering scar tissue from COVID supply shocks). A new generation of hardware startups will be needed to make this a reality and several prominent VCs are looking to back them.

Sources: Jared Friedman (YC), Estelle Godard (Promus Ventures)​.

3. 🧰 Specialized Hardware

Hardware is an expensive business to be in, a topic I’ve written about before. Startups that can drive efficiency in hardware-intensive spaces like energy, quantum computing, and transportation are likely to be the long-term winners in their respective fields as their competitors run out of funding and consolidation kicks in. There’s likely an AI angle here as well to speed up prototyping and engineering processes which have historically been expensive and slow for hardware businesses.

Sources: Estelle Godard (Promus Ventures), Garry Tan (YC), Anne-Sophie Carrese (Elaia)​.

4. 🪙 Stablecoins, Tokenization, and the Return of Web3

Many of us have been experiencing a crypto-hangover aftr the boom and bust cycles of the last 8 years. So, allow me to open this section with one painful joke that, sadly, tokenization does not mean the Hobit-ification of home construction. Instead, it really does look like crypto funding is making a come back—a trend I noticed in 2024 which will likely continue this year. Investors mentioned international payments, B2B payments, and the tokenization of alternative assets as specific areas of interest.

Sources: Malin Posern (Project A), Brad Flora (YC), Chris Lyons (a16z), Aaron Schnider (a16z)​.

5. 🛰️ Space Technology Democratization

Investors anticipate falling satellite launch costs to lower barriers for startups to enter space industries—from satellite manufacturing to data-driven space applications. Companies like Varda are already raising millions to pursue these opportunities and countless other startups will find traction thanks to the second-order effects of this trend.

Sources: Jared Friedman (YC), Estelle Godard (Promus Ventures)​.

6. 👩‍⚖️ Regulatory Tech and Embedded Compliance

Oddly enough, this area of interest was identified by two American investors. Both Harj Tagger of Y-Combinator and Angela Strange of a16z expect increasingly complex regulations in finance, insurance, and healthcare to drive demand for AI-powered compliance solutions and automated regulatory workflows. This is an area where Europe can make the rest of the world eat their words about the EU having too many regulations. For European founders with experience navigating a regulation-heavy environment this can be a promising area for innovation.

Sources: Harj Taggar (YC), Angela Strange (a16z)​.

7. 🫡 Public Sector Tech

Somehow B2G startups made it into two trends VCs are tracking this year. In addition to the previously mentioned focus on regulatory tech, both Molly Alter at Northzone and Harj Taggar at YC are looking to back businesses that can drive higher levels of government efficiency. The focus of their thesis centers on America and the changing Presidential administration, but I believe this applies equally in Europe—and especially in France where the government’s deficit has caused no shortage of problems in the last few months.

Sources: Molly Alter (Northzone), Harj Taggar (TC).

8. 💰 Next-Generation Fintech

It warms my heart to see fintech re-entering a list like this after what’s felt like many long years in the desert. From AI innovation in payments, lending, insurance, and wealth management to fintechs focused on essential goods like healthcare, education, and housing, many VCs expect to see a fresh wave of innovation in this space and are eager to back emerging fintech companies.

Sources: Hexa, Nina Achadjian (Index Ventures), Brian Hollins (Collide Capital), Dalton Caldwell (YC), Marc Andrusko (a16z)​.

9. 🧑‍⚕️ AI-Native Medical Software

These businesses will tackle a variety of issues that plague our current healthcare and medical care systems—including clinical trial design, recruitment, and monitoring, time-saving automation of administrative tasks, and the creation of new patient-friendly pathways for accessing medical care.
Sources: Julien Méraud (Hexa).

10. 🔐 Cybersecurity

Like many of these focus areas, investor priorities in cybersecurity also center around AI—including securing AI models and training data, protecting against new threats, and using AI to enhance existing products—but the interest doesn’t end there. There also remains a massive opportunity around “Cybersecurity 101” at the enterprise level to deploy scaled security in a way that doesn’t hinder productivity.

Sources: Hexa, Aaron Jacobson (NEA).

11. ✅ AI Agents

As our interactions with AI transition from prediction/conversation and towards assistance/action, the core tools behind AI will also shift from chatbots and co-pilots towards (largely) autonomous AI agents. This new space will require infrastructure to build and manage agents, marketplaces to sell them, and vertical solutions that can be trusted to perform tasks in sensitive industries.

Sources: Ed Sim (Boldstart Ventures), Hexa, Dharmesh Shah (HubSpot).

12. 🧓🏼 Longevity Tech

As human lifespans increase, investors expect to see an increased need for healthcare prioritizing prevention of health problems instead of only treatment. This shift in Europe will require a mental adjustment as well as consumers slowly begin to accept private care options in addition to the public care that is more readily available to them—but the change is coming. Startups building analysis and diagnosis tech like body scanners and tools to drive positive habits will benefit from this change.

Sources: Lucanus Polagnoli (Calm/Storm Ventures), Hexa.

This special edition of the French Tech Updates newsletter pulled date from a variety of articles and interviews. If you’d like to go deeper on any of the themes identified here, you can find all of the original sources here:

• Y Combinator request for startups winter 2025

• Andreessen Horowitz big Ideas in tech 2025

• TechCrunch – 20 VCs share their predictions on enterprise tech in 2025

• Sifted – What’s in store for deeptech in 2025?

• Sifted – Defense tech predictions

• Forbes – Where VCs want to invest in 2025

• Hexa areas of interest

• Sifted – What’s next for European fintech?