The public markets could be a major variable for venture capital in 2024, with IPOs and M&A activity expected to pick up. Despite a dip in M&A deals involving VC-backed companies in 2023, VCs predict a change this year as larger entities become more aggressive. The AI sector, which saw significant interest in 2023, may experience a slowdown due to high valuations and legal and regulatory challenges. Furthermore, layoffs and closures are expected to continue, with tech companies looking to reach breakeven and venture capital firms facing difficulties in raising new funds.
Key takeaways:
- Venture capitalists are optimistic about 2024, expecting the market to recover from the turbulence of the past few years. They anticipate a right-sizing of the market, with a shift from large, late-stage growth rounds to early-stage funding.
- Public markets could be a significant variable for venture capital in 2024, with many expecting an increase in IPOs and M&A activity. Companies like Reddit, ServiceTitan, and Stripe are anticipated to go public.
- Investors predict a slowdown in the AI sector, as high valuations and potential legal and regulatory challenges could lead to a decrease in funding. However, companies like Nvidia, Salesforce, Microsoft, and Google could continue investing heavily in the sector.
- Startups and venture capital firms may face more layoffs and closures, as companies aim to reach breakeven and some venture capital firms struggle to raise new funds. This could lead to a shakeup in the venture capital world.