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The Future of Frontier Technology 2025
Dax Williamson, Josh Pherigo, Eli Oftedal, Anjalika Komatireddy
Key takeaways
Although frontier technology is hardware-intensive and therefore exposed to tariff-fueled supply chain disruptions, the sector is booming. The age of agentic AI is increasing demand for compute. Governments are embracing VC-backed technology for defense tech innovations. And industrial automation is accelerating. These trends are driving growth as the sector brings sci-fi-like technologies closer to reality.
1/3
Of fundraising dollars went to hardware-focused VC funds.
That represents the highest share in a decade, up from 20% in 2021.
47%
Increase in frontier tech VC investment year-over-year.
Frontier tech had its second-best year ever, propelled by multiple tailwinds.
>50%
Of frontier tech unicorns have raised funding in the last two years.
Only 28% of all other unicorns have done the same.
The data
Leveraging proprietary data and deep sector expertise, we explore the breakthrough technologies shaping the physical world and why frontier tech is capturing record investor attention. As paradigm-shifting innovations move closer to reality, the market opportunity is massive – and investors are taking notice.
FUNDRAISING
Hardware is a fundraising magnet
Investors are backing frontier tech funds at the highest rate in 10 years – more than one in three VC dollars in 2024 went to a fund with a stated focus in frontier technology.
The old adage that hardware investing is tough still persists, yet advances around availability, cost and production are lowering the barrier to entry.
Notes: 1) Industries include industrials such as aerospace and construction, and IT hardware such as electronics and semiconductors. Source: Preqin and SVB analysis.
UNICORNS
Fewer stalled unicorns in frontier tech
More than half of frontier tech unicorns have raised funds in the last 24 months, nearly twice the share of all other tech unicorns during the same time.
With that said, the dry spell in frontier tech exits is unlikely to improve in the near term.
Source: PitchBook Data, Inc. and SVB analysis
REVENUE
EBITDA margins improve across the board
EBITDA margins have improved since bottoming out in 2022 as CFOs have shifted focus toward profitability and away from a growth at all costs mentality.
At the same time revenue growth has lagged and time between rounds is growing, maintaining pressure on companies to extend cash runway.
Source: PitchBook Data, Inc., Clean Investment Monitor – Rhodium Group and MIT, and SVB analysis
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