Top 5 VC predictions 2024

Last year was turbulent with many negative VC predictions becoming true. Many aspects of venture didn’t follow one trend, but instead saw the emergence of extremes on either side of the spectrum.

Funding for start-ups and scale-ups plunged more than 40%. According to PitchBook, VCs themselves also saw fundraising down over 40% last November. 

So what does 2024 hold? We share the top 5 VC predictions for 2024 based on the expert opinions.

B2B SaaS will dominate in Europe

The winning sector for the upcoming year in Europe’s VC ecosystem will likely be B2B SaaS says Sophia Bendz, partner at Cherry Ventures. They are also seeing a clear increase in female founders across Europe, especially at the early stage. Sophia believes that this trend will continue into 2024. 

Pressure on business models of Start-ups

Jai Das, President, Partner and Co-founder of Sapphire Ventures expects to see more recapitalisations and down-rounds this year. Startups that have inefficient business models and lack investors willing to support them will shut down or be sold. Many seed-stage companies will also have a hard time raising Series A since investors at that stage have become much more selective.

Travel & Generative AI

Taos Edmondson, principal at DMG Ventures earmarks travel and generative AI as hot sectors, where he finally sees some applications that will resonate with everyday consumers.

Consumer sector fundraising last year was low but Q4 saw a marked uptick. The companies at Seed and Series A were launched after the 2020-21 “bubble” and are much smarter about marketing channels and overheads, whilst still achieving strong growth.

Taos claims that he can see consumer confidence returning as well, in line with easing inflation. However, founders and investors in Europe have learned important lessons during the last few years and Taos believes that the desire for relatively near-term profitability and sensible valuations will persist. 

Data Developments In Digital Health

Healthcare has taken longer to digitise than many other sectors, due to its complexity, structural, and regulatory challenges. While not challenge-free, Forbes predicts that next year could be a turning point. Various federated data platforms are being adopted, allowing the sharing of patient datasets across siloes and leading to a boom in collaborative research and personalised medicine. Improvements in these systems will lead to vastly superior multi-modal AI models, with initial traction emerging in low-risk, back-office use cases.

Fund managers will need to address bias

Daryn Dodson, Managing Partner at Illumen Capital says that

with forty countries going through election cycles, he anticipates increased uncertainty in the markets and geo-political friction, which will further exacerbate bias in the field. 

In addition, the proliferation of AI will require significant developments to address bias in machine learning to ensure that the industries of impact sectors are accelerating both with speed of delivery, as well as the equity for diverse populations. 

Daryn claims that fund managers will need to be extremely resilient and hold to their strategies to address bias while ensuring optimal impact and returns.