#32 March 2025: The New Unicorns

Your monthly filter for economic data & insights that matter.

A Note From the Redbud VC Team

The shortest month of the year has been packed with the news: IPO dreams are fading, the new generation of Unicorns is being built of teams of < 50 people, and the Elon <> Sam drama continues. Venture capital is still feeling the hangover of the ZIRP era, with deal activity crawling, liquidity scarce, and nearly a quarter of rounds coming in flat or down - marking the highest rate in over a decade. IPO dreams are on thin ice as companies like Turo back away from the spotlight, while Stripe and others seem perfectly content staying private indefinitely. And while exits may be stalled, innovation isn’t slowing down. Founders are building faster than ever, shipping new products, and finding ways to do more with leaner teams and tighter capital. FYI - we’re backing fast-moving teams nationwide, so let us know if that’s you!

Redbud VC invests monetary ($50k-$150k) and social capital in early-stage tech founders. We bring monthly Redbud VC, tech, and economics updates. - We've filtered thousands of sources for our 14k+ readers, so you don't have to. Enjoy🥂

Missouri Startup Weekend 🚀 

Join us April 11th - 13th at the EquipmentShare HQ for a weekend of building the next $B company in Columbia, MO.

What | Missouri Startup Weekend is a weekend-long event that brings together aspiring entrepreneurs, developers, designers, and operators to build a startup in one weekend. MOSW has been the genesis point of billion-dollar startup companies like EquipmentShare and Zapier. Participants will have access to a diverse talent pool (100 participants/ 10 teams) and hands-on support from world-class mentors (10 / 1 per team) who have founded companies like DevStride, Zapier, and Balto and investors from great funds like Lightbank, Flyover Capital, and slightly biased by Redbud VC

Who | This is for the weekend hustler, the builder, the tinkerer, and the intellectually curious. Bring your new idea or something that you’ve been working on! Have an existing company? Apply for a spot on our new Sprint Track!

When | April 11th -13th

Where | EquipmentShare HQ

Prize | $45k for first place, including: 💻 $15k in development services to launch MVP, 💰 $10k cash for startup expenses, 🎨 $15k branding and design work, ⚖️ $5k legal services to set up your company + 6 months of support from the Redbud VC team and potential for up to a $150k investment.

There’s more, but we feel like this is enough of a reason to get a ticket ⤵️

As Midwest-based investors, we’ve seen this and some weird side letters…
Don’t worry; only standard YC SAFES here

🔥 Burning question of the month 🔥

Will a one person team build a unicorn within the next five years?

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📈 Macro Trend Report

  • IPO OR NO GO | After a brief glimmer of life in 2024, the IPO market is once again feeling... meh. While companies like Reddit and Tempus AI made splashy public debuts last year, 2025 is seeing players like Turo slam the brakes on going public despite profitability and a business model (that investors typically love). Why? Slowing growth, shaky financials, and the 46% fall of their adjusted EBITDA. Stripe, meanwhile, seems perfectly content on the sidelines, opting for employee tender offers over Wall Street scrutiny because who needs an IPO when you’ve got investors keeping everyone happy? It’s a shift from the venture playbook, where the endgame was always a public exit. Now? Liquidity is coming from secondaries, not the stock exchange and unless the market heats up in a big way, we expect more companies to follow Stripe’s lead - staying private, staying profitable, and staying far away from the IPO spotlight.

  • AI | Lots of model advances this month - OpenAI just rolled out GPT-4.5, its most advanced model yet, promising fewer hallucinations, sharper reasoning, and smoother interactions for anyone willing to pay over $200 a month. Meanwhile, Elon Musk is busy promoting Grok 3, his latest chatbot from xAI, which he claims is more "based" and less filtered than the competition. Early tests? Mixed. While Grok 3 is slightly more willing to wade into hot takes, it’s still more polite than provocative. For all the noise, it’s clear both camps are racing to build models that feel smarter, faster, and just edgy enough to go viral. Outside of the product - Musk and OpenAI CEO Sam Altman, once co-founders, are still locked in a legal mess. After Musk lobbed a surprise $97.4 billion bid to buy OpenAI’s assets, an offer Altman instantly rejected (along with the OpenAI board) as just another power play, it's clear this rivalry is getting personal. Musk insists OpenAI has strayed from its nonprofit mission, while Altman argues that raising billions from investors is the only way to fund the AI arms race.

    • NVIDIA | The clear frontrunner of the AI boom posted another standout quarter, generating $39.3B in revenue - up 78% from the year prior and $22.1B in profit. Perhaps most impressive, Nvidia is achieving this scale with a relatively lean team of just 36,000 employees, only 20% larger than last year, despite more than doubling its revenue in that same period. That said, Nvidia isn’t without its challenges. Competition from China’s DeepSeek is intensifying, and gross margins are feeling some pressure as next-generation systems become more complex and costly to produce. Still, with its new Blackwell chips ramping faster than any product in company history and major roles in projects like the $500 billion Stargate AI initiative, Nvidia remains firmly at the center of the AI economy.

  • VENTURE CAPITAL | Venture capital is still waiting for its comeback tour. Dealmaking has been muted for nearly three years, and despite some cheerier headlines about rising median valuations in 2024, the numbers under the hood tell a different story. Nearly 25% of all venture rounds this year have been flat or down rounds - the highest percentage in over a decade. Companies are extending their time to raise to get traction realigned with valuations. Meanwhile, annualized valuation growth between rounds for later-stage startups has cratered to just 13.7%, a staggering 79% drop from 2021. Essentially, companies are clinging to lofty valuations from the zero-interest-rate era, but investors aren’t exactly lining up to pay those prices. And the liquidity problem? It’s getting harder to ignore. With exits still few and far between, over $4 trillion is now locked up in the private markets - more than double the $1.7 trillion in 2020. LPs, already over-allocated to venture, are sitting on their hands, and even a couple of Fed rate cuts this year likely won’t move the needle much. At this point, the real barrier isn’t just market conditions -it’s a valuation overhang of startups that grew too fast, raised too big, and now can’t exit without facing painful markdowns.

Check out The Data Outlet to grab data on sourcing investors, talent, and co-founders at a cost lower than other marketplaces or the time spent scraping.

  • AMAZON > WALMART | After years of chasing Walmart’s retail throne, Amazon has officially pulled ahead. The company posted a record $187.8 billion in revenue last quarter, outpacing its brick-and-mortar rival (Walmart) and surpassing Nvidia’s latest numbers. While Walmart continues to dominate grocery aisles, Amazon’s edge comes from a business that stretches far beyond the checkout lane - AWS, their ad platform, and a logistics network built to move anything, anywhere. Amazon’s growth has cooled slightly heading into 2025, and investors weren’t thrilled by softer-than-expected guidance. But with $59 billion in annual profit and multiple high-margin engines driving the business forward, Amazon has now taken the retail crown.

  • THE DEATH OF DUO | Duolingo "killed off" its beloved owl mascot, Duo, this month. Announced via TikTok with the subtlety of a Cybertruck collision (literally), Duo’s death sparked a wave of viral content from brands like Netflix, Halo, and even the World Health Organization, all mourning the loss of the green little bird. But beyond the memes, this might be one of the most effective marketing plays of the year. The stunt "hijacked" roughly 84% of the online conversation around Super Bowl ads - outperforming brands that actually paid millions for a commercial spot, and early data shows Duolingo surged in app downloads and daily usage as users raced to “bring Duo back to life” by completing lessons.

  • AI IS EATING YC (LITERALLY) | The wave of AI startups flooding Y Combinator has officially turned into a tsunami. Roughly 80% of YC’s most recent batch had “AI” in the name or pitch, a massive jump from just 15% five years ago. But with that boom is coming with some growing pains. Optifye.ai, a current YC company, recently faced backlash over its AI-powered factory surveillance tool designed to monitor workers in real-time. The demo landed so poorly online that YC quietly deleted it from its social channels. It's a reminder that while AI unlocks creation, it also invites a fair share of hype, FOMO, and questionable ideas (some of which probably should’ve stayed in the brainstorm doc…)

📰 Middle America Headline of the Month

Chicago's iconic tech incubator, 1871, is moving out its Merchandise Mart HQ after 13 years, signaling both the end of an era and the shifting center of the city’s startup scene.

Chicago’s tech hub has shifted west, and costly office space is harder to justify post-pandemic. With 1871’s next steps unclear, the pressure is on city leaders, local ecosystem members, and funders to keep Chicago in the national tech conversation.

💰 Flyover Deals

Many strong Seed and Series A rounds this month! 🚀

🐄 Middle America vs. National Macro Trends

  • Unemployment in Missouri stayed steady this month at 3.7%, while the National Average slipped to 4.1% 

  • The Midwest Consumer Price Index rose slightly this month at 3.4%, while the national rate is up 3.4% on the year ✅

🧠 This Month's Recommendations

📚 What We’re Reading

🎧 What We’re Listening To

  • When Steve Chen, Chad Hurley, and Jawed Karim left PayPal to start YouTube [48 min]

  • Chris Farmer of SignalFire is betting the venture industry will never look the same [18 min]

  • Now at a $2B valuation: Mercor CEO on how they started [54 min]

  • Parachute Home founder Ariel Kaye on Advice Line, where she answers questions from emerging founders. [50 min]

📆 What We’re Doing

  • Prepping for Missouri Startup Weekend, which will be held at EquipmentShare’s (2014 startup weekend winner) new $100M facility in Columbia, MO, built over the last year.

🪝Outside Main Hubs: Picks of the Month

📍Dallas, TX

On-demand laundry and dry cleaning

Pre-Seed

📍Cincinnati, OH

Digital will platform

Pre-Seed

🚀 Redbud Highlights

Congrats to the team at Braid for crossing $2B in deposit and transaction volume!

18 months to hit the first $1B in deposit and transaction volume and just 6 weeks to double it.

We’re throwing it back to why we invested in Randy, Jake, and the team at Braid

🛠️ Resources

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The information provided in this newsletter is intended for general understanding and educational purposes only, not as a guide to investment decisions. The authors, publishers, and distributors of this newsletter are not licensed financial advisors and are not providing financial advice or investment advisory services.s