10 VC Predictions for 2024
The year is ending, and it's time to peek into the next one and see what it might have in store. While some people crack open fortune cookies, our team is forecasting the future of the #VC industry. This could be influenced by many factors, including a growing number of #startups that could close their doors, the US presidential elections, and VCs growing appetite or profitability instead of high burn rates. But can we say something more? Yes!
1. The volume of AI funding will decline. Large VC funds already deployed billions in a few startups that raised mega rounds in 2023. Now, the industry needs to stabilize and see how these investments pan out.
2. For many years, IT bills were growing exponentially justified by major savings from automation. But it is becoming obvious now that the spiral is out of control. Startups focused on IT cost reduction will be in the spotlight.
3. Good start-up #founders will become more picky in terms of who they let into their cap table, as a lot of VCs who said they were founder friendly and value-added, were clearly value-destroying in the last 2y.
4. Lots of GTM motions such as PLG, bottom up, and open source will slightly fall out of favour as the purchasing power of those at the bottom remains squeezed, and their power within organisations to influence how money gets spent has diminished.
5. Family offices will be more active than ever in early stage direct investments. FOs recovered their liquid assets in 2023 and real estate sectors + private equity will not be that attractive for them. (Finally, valuation expectations from founders and family offices will finally be closer to one another)
6. A lot of hiring opportunities: many professionals will understand that their current option pool is not that promising anymore and will be open to exploring something new.
7. Deal making will be influenced by geopolitics more than ever. Large US companies might not be able to invest in China, CIS, and other regions, and vice-versa. This will be bad for the global markets but will lead to spikes on the local ones.
8. Many funds will face challenges raising a new fund in 2024 due to the poor performance of the latest vintages.
9. Moderate 2x+ TVPI would mean top 1% performance among other funds (only 20% top performers will be able to deliver 1x return)
10. Suits sales will exceed expectations. VCs and founders would probably go shopping for suits, shirts and ties.. you have more chances to fundraise from family offices and private equity when you are not wearing Hoodies & Nikes.
Ruslan Sarkisyan Saagar Bhavsar Joël Van Dijk