First published on 
By Rod McNaughton, Professor of Entrepreneurship, University of Auckland
Photo: 123rf
Startups have always been at the forefront of innovation. But factors such as artificial intelligence (AI), sustainability and decentralization are expected to reshape industries in 2025.
Companies are defined as startups when they are in the early stages of development. They are characterized by the potential for rapid growth and external financing. And they are also sensitive to economic changes and investment uncertainty.
For Australia and New Zealand, startups play an important role in overcoming geographic and market constraints. They can also help address persistent persistent productivity challenges.
The industry’s startup ecosystem estimates that Sydney was worth $72 billion in 2024 with over 3,000 startups. New Zealand’s ecosystem is valued at $9 billion across 2,400 startups.
Australia and New Zealand have weathered global challenges such as recent downturns in investment activity when startups struggled to secure funding.
But venture capital investments in both countries have recovered well in 2024 compared to elsewhere. And the outlook for 2025 is cautiously optimistic.
Global trends in 2025
As global trends reshape industries, local startups could take the lead. Here are eight key trends to define their path in 2025.
Generative AI: training creativity and efficiency
Generative AI – a type of artificial intelligence technology that can produce text, images and audio – helps businesses automate complex tasks, create personalized user experiences and reduce costs.
The challenge will be balancing rapid innovation with ethical considerations around data privacy, bias and environmental impact.
Companies that demonstrate transparency and accountability are more likely to stand out in an increasingly competitive field.
Sustainability: a competitive advantage
Sustainability has evolved from a compliance requirement to a strategic advantage.
Globally, carbon capture and green technology are attracting record investments. Sustainability is driving some of the most innovative solutions in Australia and New Zealand, where climate resilience is a critical issue.
The rise of sustainable startups aligns with growing consumer expectations and government incentives.
Techny de santé: the personalization revolution
Health technology is undergoing a profound shift, moving from reactive care to proactive, personalized solutions.
In 2025, personalization will continue to influence healthcare. Startups using AI and data analytics to improve results and accessibility are likely to see growth.
Evolution of remote work
THE Shift to remote and hybrid work has reshaped business operations around the world. This is especially the case in the wake of the global pandemic.
Tools that improve productivity and enable startups and large companies to build global teams will help businesses access talent across borders.
Decentralization: blockchain beyond cryptocurrency
Blockchain technology goes beyond its roots in cryptocurrency and has become integral to data transparency, efficiency and security.
Decentralized applications, which run on blockchain technology and rely on peer-to-peer networks, are changing the way businesses do things in areas like finance, healthcare and entertainment.
Space Tech: Final Frontier Failure
Space technology is No longer the exclusive domain of government agencies. Startups such as New Zealand’s rocket are increasing access to space.
Australian Company Fleet Space Technologies is deploying nanosatellites to improve connectivity in remote industries like mining and agriculture.
Diversity in funding and leadership
Globally, funding disparities remain a challenge for groups underrepresented in entrepreneurship, including women, indigenous peoples and minority communities.
Startups led by these groups often receive a fraction of the funding allocated to their counterparts, limiting their ability to scale and compete.
Women-led startups, for example, attract less than 3% of venture capital. Indigenous and minority entrepreneurs often face unique barriers such as limited access to networks and culturally relevant support.
Programs designed to address these inequalities can play a transformative role. These initiatives include those aimed at female founders, providing mentorship, funding and business development resources. Similar programs for cultural groups providing culturally aligned funds and advisory services are also important.
In 2025, systemic barriers will continue to attract attention, with growing demands for startups to be more diverse and inclusive.
Alternative financing models
Facing a continued economic downturn, startups will likely continue to explore alternative financing models to fund growth without sacrificing significant equity.
Traditional venture capital often leaves gaps, especially for early-stage companies or those in underserved industries.
Bootstrap, where founders self-fund and grow sustainably, continues to be a cornerstone for many entrepreneurs. However, crowdfunding platforms are evolving rapidly. Other options allow startups to engage directly with their communities and raise significant capital while building customer loyalty.
In 2025, new fintech developments and AI-driven platforms could streamline access to grants, loans and investment opportunities, making financing faster and more accessible.
These changes are set to expand the range of options for founders, reducing reliance on traditional venture capital and creating a more inclusive and vibrant funding ecosystem.
Startups as catalysts for change
Startups will continue to experience greater uncertainty than usual and will need to navigate the complexities of 2025, tackling global challenges with local ingenuity.
They will continue to reshape industries and solve critical economic and environmental problems, harness generative AI, advance green technologies, and innovate financing models.
However, to succeed, startups must prioritize inclusiveness and support innovative financing approaches to ensure broad participation in technology-driven growth.