How VC has fared in 2024 so far...

Venture Trends we’re seeing in 2024

As the year goes on and deals regress to previous numbers, we take a look at some trends that are going on in VC currently.

IPO Landscape

In 2024, the IPO market has transformed due to regulatory shifts, market volatility, and changing investor sentiment. Startups aiming for public listings now encounter a more rigorous process, emphasizing financial stability and profitability. This demands startups to prioritize sustainable growth strategies over-aggressive expansion. We’ve seen startups like venture-backed Astera Labs and Reddit IPO, soar to super high valuations that have since cooled as markets are now digesting the fact that interest rate cuts might not come as heavy as expected (or at all) and are pricing in cuts at the ceiling of 75 basis points.

Deal Count

We’ve seen a drop in deal count in the past year with wary macroeconomic conditions making it harder for firms and startups to raise money. Gone are the days of funds plowing money into startups hoping to hit big and the days of strategic planning, having a viable product, and customer traction are back. Since it’s now easier to create a product with all the applications and software we have, VCs are looking for real traction before writing a check. A more sensible approach is also being taken into valuation as recent startups that have gone public have had their valuations dropped as sky-high valuations in their venture rounds led to a correction when it came time for public markets.

AI

It caught everyone’s eye when Open AI CEO Sam Altman announced he is planning to raise $7 trillion to reshape the business of chips and AI. Maybe this is a bluff, maybe it’s not, but AI stocks have soared, AI companies are booming, and seemingly everything with the word AI in it has been able to raise money. This has led to some high-profile investors thinking we are on the brink of the next tech bubble. Global funding to AI startups reached close to $50 billion last year and investors’ appetite for AI hasn’t stopped anytime soon as Amazon’s Venture arm just injected $4 Billion into Anthropic. Despite fluctuations in the investment landscape, generative AI startups have consistently garnered attention, showcasing resilience in the face of overall funding declines. This sustained interest highlights the transformative potential of generative AI across various industries. Similar to past shifts towards high-potential sectors, such as the boom in subscription box services, investors are recognizing the strategic importance of investing in innovative technologies with high growth potential. Some startups who have raised major money in this space are Beijing-based Moonshot AI, which raised a $1 Billion series B led by Sequoia China, and Alibaba’s venture arm and Glean, who raised north of $200 million.