Later-stage companies, in contrast to the optimism surrounding new AI-driven companies, are navigating a post-bubble investment round dynamic. Many of these companies raised large amounts of capital at high valuations during the venture bubble of 2020-2021. Now, they are in a post-bubble reset mode where they have to demonstrate capital efficiency, growth, and a willingness to reset valuation expectations. The narrative for 2024 is expected to shift to a focus on the product and market traction of AI-focused startups, while many mid- to late-stage companies may face a reckoning as their cash balances drop.
Key takeaways:
- 2023 has seen a significant increase in the number of early-stage startups seeking financing and mid- to late-stage companies raising subsequent rounds.
- Generative AI technologies have led to a boom in new companies and investment opportunities, with more companies seeking financing than ever before in the history of Thomvest Ventures.
- Later-stage companies are navigating a post-bubble investment round dynamic, having to demonstrate capital efficiency, growth, and a willingness to reset valuation expectations to secure financing.
- 2024 is expected to see a reckoning for many mid- to late-stage companies as they face dropping cash balances and are forced into financing, sale, or wind-down of the business. However, it may also be a year of entrepreneurial success as the best later-stage companies go public or are acquired.