We talked to our CEO Tiffany Wilson two weeks ago about 2023 highlights and healthcare tech trends to pay attention to. This week, she discusses her 2024 startup forecast: including market revitalization, investors taking a pragmatic approach, and anticipated VC activity.
“Looking back, 2023 was a challenging year for startup funding, but I'm optimistic about the year ahead,” says Tif.
Based on the industry trends in Pitchbook and our observations at the Science Center, here are a few predictions we have for 2024 and what startups can do to best prepare for the challenges and opportunities ahead:
A Revitalized Market
- With positive economic indicators emerging through 2023, we anticipate a resurgence in IPOs next year. This rebound seems poised to revitalize the market and boost investor confidence.
- We expect U.S. venture capital fundraising to gather momentum, potentially reaching levels similar to those in 2020, which would signify a substantial improvement from 2023.
- Startup support initiatives, including our own Capital Readiness Program, will become increasingly critical. Their role in catalyzing deal-making and providing essential support to startups is set to grow in importance.
Investors Take Pragmatic Approach
- Insider-led funding rounds are likely to maintain or even surpass their 2023 levels, reflecting a continued reliance on trusted networks within the venture capital ecosystem.
- However, the count of active unicorns and their aggregate post-valuations might see a decline, suggesting a more cautious and realistic approach to valuations.
Anticipated VC Activity
- In an environment of stable or falling interest rates, we foresee an uptick in VC deal activity, particularly with the involvement of nontraditional VC investors. This could open up new avenues for funding.
- The average size of U.S. VC funds may decrease, which could indicate a shift towards more focused, strategic investments.
As for startups preparing for the challenges and opportunities of 2024, here are some general tips:
In a fluctuating market, the ability to pivot and adapt quickly is invaluable.
Build Strong Networks
Relationships with investors, mentors, and industry peers can provide crucial support and opportunities.
Focus on Sustainable Growth
Prioritize building a solid business foundation over rapid expansion.
Leverage Startup Support Programs
These programs offer not just funding but also mentorship, resources, and networking opportunities.
Keeping abreast of market trends and investor sentiments can help in making strategic decisions.
Emphasize Value Proposition
In a competitive funding landscape, clearly articulating your startup's unique value is key.
Plan for Multiple Scenarios
Having contingency plans for different market conditions can help navigate uncertainties more effectively.
Maintain Focus on DEI
Even in challenging times, it's vital to keep diversity, equity, and inclusion at the forefront of your business strategy, ensuring a varied range of perspectives that can foster innovation and broader market appeal.
The landscape is evolving, but with the right strategies, startups can not only navigate these changes but also capitalize on new opportunities.