Once again, we’ve asked the team to share their predictions on the ecosystem, VC, fundraising and 🚀 beyond. After some hits and misses in our 2023 Midwest Ecosystem Predictions, we’ve curated a collection of compelling insights for the year ahead in 2024. Here are our hot 🔥 takes:
Victor
I believe that funding activity has ‘bottomed out’ and will steadily pick back up, but ‘reset’ valuation multiples are here to stay. I think we are seeing the tip of the iceberg with firms calling it quits/imploding. There will be more Openviews/Countdowns going ‘loudly,’ but many more going quietly — not making new investments, not raising another fund but never issuing a press release. It’s hard for me to be optimistic that we’ll see many large new funds raised or unicorns minted, though I know there will be a positive surprise or two.
I think investment in AI will remain but I don’t foresee a ‘frenzy’ like we saw with many categories in ’21. Instead, there will be an increased focus on very tangible AI startups that bring real, needed value to their customers (and those customers may or may not know that there is AI happening behind the scenes).
Lastly, some industries will stay hot (vertical SaaS, healthcare, industrial/manufacturing) while some will be cooling down (supply chain, proptech) and others will stay cold (consumer, fintech).
Mike
My prediction for 2024 is that for VC and startups it will be an emotional rollercoaster of a year. While there’s going to be an increase in funding announcements to celebrate, we’re still going to be seeing a significant amount folks closing up shop. Overall it will be better than 2023, but “we aren’t out of the woods yet.”
Abhinaya
We have seen a ton of VC raise new funds during 21–22 vintages. Even if they kept quiet in 2023, with the amount of dry powder in the market, there will be pressure on funds to deploy capital. My prediction is that we are going to see more funding activity this year.
Given the number of tech layoffs that we have seen, a few of them might be in the best position to start their own thing. We will also see an increase in number of founders.
Katie
I project another year of wild twists and turns in the economy, but I think we’ll see some really great momentum for increased hiring and spending in 2024, especially for some of the larger tech businesses that did some right-setting in 2023. It won’t be as dismal of a year for enterprise sales, which hopefully means the B2B SaaS-heavy Midwest will see an uptick in investing and growth.
Despite the uncertainty that 2023 brought us, I’m still predicting a non-Chicago Midwest unicorn in 2024 as we hopefully see continued growth and investment in the region as a whole.
Leandro
I predict that interest rates in 2024 will remain flat (or the Fed will decide to do a rate cut) and that the macro economy will continue strengthen, pointing towards an increase in startup fundraising compared to 2023 and the IPO window opening. However, while some will have to IPO to provide liquidity, some of the strongest pre-IPO startups will likely stay private (leveraging sidelined dry powder) to continue their efforts towards profitability, efficient growth and/or stronger financials in preparation for Wall Street which naturally hasn’t been kind to none free cash flow generating IPOs.
Valuations for startups will continue to be pressured at all stages. Especially for post-Series A startups that have only raised insider bridge rounds in the last 24 months, and thus are still held as relatively overvalued positions/valuations than what downstream investors will be willing to invest at. Coupled with fiercer competition for funding from the pent up pipeline of startups that delayed fundraising in the tough 2023 environment.
AI governance and guardrails will gain even more steam as an area of importance leading into the 2024 U.S. Presidential elections. We’ll likely see viral deepfakes and misinformation leveraging generative AI created content boosted by TikTok’s recommendation algorithm.
Have any predictions for the ecosystem this year? Let us know in the comments.
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