by Damian Ryan, founder and managing partner of Ryan Capital Partners
2024? In a word… difficult. Unless, of course, you’re raising cash for a one-of-a-kind AI business backed by a solid team and brilliant long-term contracts.
Investor appetite has cooled since the post-COVID surge, and it’s not due to one factor but a mash-up of at least five, creating a landscape that’s more cautious than ever—felt most keenly in the digital sector.
Rising interest rates mean investors can see “safe” returns without throwing cash into ambitious young tech firms. Add in higher leverage costs, global conflicts, and a frustrating drag from corporates to demand more for less budget, plus Rachel’s red briefcase contents (coming soon to a Parliament near you)—it’s all been a bit bleak.
There is money out there—but it’s harder to access, deals are taking longer to close, and valuations are under pressure. It’s a buyers’ market, likely to stay that way into next year. Here’s my snapshot for digital sector players navigating the landscape:
Venture Capital: VC funding is down nearly 50% from 2023. For many, 2024 was about shoring up portfolios rather than taking new risks, leaving some entrepreneurs facing the reality of a “down round.” Frankly, I respect those taking action and braving the renegotiations to move forward. Better a down round than no round.
In real terms, 2024 has been one of the toughest years for fundraising since 2001, when investors briefly decided the Internet wasn’t really that valuable after all. But with interest rates finally whimpering downwards, we’re already seeing a pickup from deal origination teams at both VC and PE levels. That’s encouraging.
Most of the London-based VCs who sat out this year are eyeing 2025 with cautious optimism, so while it’s no golden age, things may start to look up.
What’s drawing interest? AI still reigns, along with e-commerce, data, cyber, renewable tech, and life sciences. Digital sector investors are elusive, yes—but they can’t hide forever.
Private Equity: PE funds are poised for action in 2025, often willing to pay 10-15% more than trade buyers while offering appealing equity structures to founders. This is especially attractive in consolidation markets like AdTech, MarTech, and agency-led AI innovation.
Private equity remains top-of-mind for founders, especially those interested in “two bites of the cherry”—the chance to re-invest alongside PE for an exciting buy/build/transfer growth phase, versus the one-and-done option of a trade exit.
M&A: Deal volume might be down 20% this year, but total deal value has surged by over 60%, with high-end deals largely unaffected. I expect further consolidation in AdTech, MarTech, and agency spaces through 2025, despite wildly variable multiples—this year alone we’ve seen revenue multiples as low as 0.5x and as high as 8x (translating to EBITDA multiples of 3x to nearly 100x). Understanding these variances is essential: it’s not just about inherent value but knowing where that value can be applied and optimised.
Advice for Navigating 2025:
- For Investors – Patience, Patience, Patience. Don’t ditch the portfolio just because clients are hesitant to spend. Instead, work with your investee companies, retain your quality talent, and if it comes down to it, embrace the down round. A down round is often the smarter choice over no round.
- For Fundraisers – Timing is everything. Starting in early 2025? Be ready to prove “sustainable growth”—40% is the new hockey stick. Avoid long-winded, utopian pitches. The market’s too savvy for Narnian journeys through financial projections.
- For Vendors – Precision beats volume. Run a controlled, targeted sale process. This isn’t a numbers game—sending 300 IMs isn’t smart; it’s lazy. Investors prefer to feel handpicked and valued. You’ll only sell once—do it right.
Damian Ryan is founder and managing partner of Ryan Capital Partners, trusted advisors to the media, technology and marketing services sectors. Ryan was formerly M&A Partner – Media and Technology at BDO. Here he published The Martech Report, the first to define and value the global martech sector.
This year, among other transactions, his firm led the sales of WhenFresh to PriceHubble Inc and Pixel Artworks to Waterland Private Equity. He is the author of Understanding Digital Marketing and serves on the corporate finance committee of the Chartered Institute of Securities and Investments.
