The State of Startups in the Southeast 2025 report highlights a venture ecosystem that has recalibrated after the pandemic and matured into a stable, influential force in the U.S. venture economy.
The Southeast deploys 10-12% of all U.S. venture dollars. What distinguishes the region from other innovation hubs is its high level of investment precision and governance. Rather than pursuing hype cycles and mega-deals ($100M+), Southeastern investors prioritize a more meticulous approach to funding. As a result, the region has seen deal counts drop and average check sizes rise.
In 2025, the average deal size in the region is projected to reach $6.8 million, up 38% from 2024. The jump is a sign that investors are backing proven models with clear visibility into growth, margins, and capital efficiency.
Along with stricter funding requirements, strong valuation discipline has also returned. The data show that in the Southeast, capital invested and post-money valuations are rising almost in tandem. This equilibrium suggests that a rational pricing mentality has taken hold. Multiples reflect real, demonstrable traction and market validation for portfolio companies. Investors expect their startups to satisfy funding milestones with robust business models, predictable cash flow trajectories, strong unit economics, and durable markets. The fundamentals-based relationship positions the venture ecosystem for a well-balanced risk-reward profile.
Artificial intelligence continues to shape the trajectory of nearly every sector. Nonetheless, Southeastern Venture remains pragmatic in its approach to capital allocation to AI startups. Rather than chasing pure-play AI infrastructure, investors in the Southeast are focusing their attention and money on companies that use AI to drive measurable efficiency and enterprise value. These are not speculative technology bets; they are embedded performance enhancements. Businesses that deploy AI to reduce costs, improve decision-making, or accelerate customer acquisition are the ones securing capital. The approach demonstrates how mature investors view AI as an operational multiplier rather than a standalone offering.
The two sectors most impacted by this approach are Information Technology and Healthcare. These two sectors dominate the 2025 funding landscape, together accounting for more than half of all capital invested in the Southeast. By embedding AI across all aspects of its businesses, these two sectors have also built structural resilience. Continued enterprise digitization, cybersecurity demand, and cloud infrastructure expansion create ongoing growth potential for Information Technology. The Southeast remains a hub for healthcare tech innovation, driven by payer-provider networks, health data infrastructure, and value-based care models. Other sectors, such as Business Services, Consumer Products, and Energy, continue to capture investor interest, albeit with smaller checks.
Beyond deal and sector trends, the State of Startups report highlights a critical macro factor – older private equity and venture funds are confronting a "maturity wall. Many of the funds launched during the high-liquidity years between 2018 and 2021 are reaching the end of their investment horizons. With fewer exits and limited IPO activity, many traditional funds face pressure to generate liquidity. That dynamic has created secondary market opportunities and increased demand for capital structures that offer liquidity and continuity without forced exits.
This environment amplifies the appeal of Evergreen private market funds, which can deploy and recycle capital without vintage constraints. The combination of capital discipline, rational valuations, and aging fund vintages positions Evergreen funds as attractive vehicles for investors seeking to add flexibility and compounding potential to their portfolios.
The data from the State of Startups point to an inflection point in private market investing. The regional venture economy has recalibrated and regained its balance after years of volatility. The excesses of the prior funding cycle have given way to clarity, consistency, and performance discipline.
For investors, this moment represents renewal and a promising path forward paved with selectivity, innovation, and performance alignment. The region has matured into a sustainable engine of innovation, producing opportunities that align with long-term capital preservation and growth. In an environment where quality is once again outperforming quantity, disciplined investors will find that the Southeast offers not just opportunity, but enduring value.
Get the data and insights > State of Startups in the Southeast 2025.
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