Will 2024 be the year to look forward to?
Written by: StartupBoy
**Source: **Investment Practice Institute
It’s time for the year-end summary and New Year’s thoughts again. Although a lot has happened in the past year, for people in the venture capital circle, as I said in my previous article "3200 VC-invested startup companies went bankrupt, the one who invested in PLG As mentioned in the article “VC Announces Suspension of Investment”, this year has been difficult.
But AI has obviously been deeply engraved in the hearts of every venture capitalist, and it has also become everyone’s hope for future opportunities. Combined with some of the latest data, let’s first make a simple macro summary of the past year. First, some data from Crunchbase:
- In 2023, the financing of unicorn companies will drop significantly, only about 25% of the market peak in 2021.
2.In 2023, the world’s nine most active VCs’ investments in unicorn companies dropped significantly. These nine investment institutions invested in a total of 44 unicorn companies in 2023, accounting for 13% of all financing unicorn companies that year.
In 2022, they invested in 213 companies, accounting for 28% of the financing unicorns that year. In 2021, that number was 471 companies, accounting for 30% of the asset class. The following is a general picture of the nine major investment institutions. Basically, the trends are relatively similar:
It can be seen that the three most active ones: Tiger Global, Coatue and SoftBank Vision Fund (SoftBank), have increased their investment volume by nearly three times or more in 2021 compared with 2020.
The number of investments by a16z, Accel, Lightspeed, Index and Insight Partners in 2021 has nearly doubled compared to 2020. Sequoia is the only company on this list whose investment pace increased but did not double from 2020 to 2021.
Due to the difficulty of financing, the number of unicorn companies may decrease in 2024, some may go bankrupt, and some may be acquired (but given the current regulatory pressure, acquisitions with large valuations may become more difficult, such as Adobe The acquisition of Figma was canceled due to regulatory pressure), some companies with good growth may go public, and of course some may continue to raise some funds at low valuations. Overall, it’s harder to quit.
AI is becoming everyone’s hope, but for VCs, it doesn’t seem to be that easy. According to the latest statistics from FT, investment funds from giants such as Microsoft, Google, Amazon and NVIDIA have accounted for 2/3 of the financing related to AI startups in 2023.
Of course, this is mainly due to the huge financing of several large model companies, so the proportion of the amount alone does not completely explain the problem, but it is also a fact that the investment of giants in the field of AI is generally more active.
Thinking about 2024, one of my favorite investors and Newsletter author NBT (see the article I shared about him before) combined 50 investors and founders to make a prediction for 2024. The content involved is as shown in the figure below. Some of them are in line with some of my previous articles. Here are 36 selected ones that I am more concerned about and think are worthy of reference:
About the ROI of AI
1.Tomasz Tunguz, founder of Theory Ventures:
2024 will be the year when companies achieve substantial improvements in productivity through AI, with the opportunity to increase ARR per employee by 10-15%.
2. Jamin Ball, Partner at Altimeter Capital:
2024 will be the year of “prototype to production.” In 2023, everyone is trying AI, but there are many questions that limit the promotion of these experiments, such as how much do they cost? Are they safe? How big is the compliance risk? In 2024, these questions will be answered, and we will see AI applications move from experiments/prototypes/internal applications to large-scale customer-facing deployments.
3.Jake Saper, Partner of Emergence Capital:
2024 will be the year startups experiment with outcome-based pricing. As GenAI begins to show quantifiable business impact, startups will begin to align value creation incentives with customers. For example, Intercom is experimenting with Fin, an AI robot that charges money by solving problems. This endeavor will be bumpy, but I expect 2024 to be a learning year.
4.Chapter One Founding Partner Jeff Morris Jr:
2024 will be the year of the biggest change in how we design, program, QA, A/B test, and deploy software—work ultimately enabled by AI. As AI software tools proliferate in 2023, we’ll remember 2024 as the year when world-class design, product, and engineering teams effectively integrated these new AI superpowers into every aspect of their daily workflows—and that hasn’t happened yet (Most teams are still experimenting).
2024 will be remembered as the year of seismic change in software building.
About AI infrastructure
5.KP Partner Bucky Moore:
2024 will be the year of AI models that transcend the limitations of the Transformer architecture, giving us larger contextual windows, faster and cheaper inference, and overall more powerful AI systems.
6.20VC Partner Harry Stebbings:
The big breakthrough in 2024 will be a routing infrastructure based on large models. Cost is the most prohibitive factor in using large models at scale. Companies will use multiple large models in real time for different purposes, and a range of companies will emerge that intelligently route requests to the correct large model around different application scenarios.
7.Canva executive John Milinovich:
2024 will be the year that real-time, multimodal AI becomes ubiquitous. While consumers have had access to multimodal AI over the past few months through ChatGPT, Bard, and Bing, it’s only now available at the API layer. When combined with advances in smaller, lower latency models, this will lead to an explosion of innovation at the edge of every application and connected device.
8. Jake Saper, Partner at Emergence Capital:
2024 will be the year that the open source base model ecosystem becomes a key enabler of GenAI adoption in the enterprise. Data privacy concerns have been a barrier to adoption so far, and mature open source models and training infrastructure will enable privacy-focused enterprises to deploy GenAI while minimizing third-party risk.
About AI applications
9.DoorDash Gokul Rajaram：
The big trend in 2024 will be the explosion of various types of AI Agents, focusing on meeting the various needs of consumers and various business transactions.
10.Spark Capital Partner Natalie Sandman
2024 will be the year when AI native applications explode. Today, Anthropic’s Claude and OpenAI’s ChatGPT are the “Excels” of large models—easy to get started, but offering tremendous depth and potential for advanced users to solve complex application scenarios. Opportunities will arise for AI-native SaaS applications (built with AI first from day one) to unbundle these complex/specialized workflows currently performed in Claude and ChatGPT.
11.IVP Partner Shravan Narayen:
One trend in 2024 will be the resurgence of mobile-first productivity. It is no longer enough to have information from around the world, we also expect to be able to make decisions and take action at any time, both in the workplace and at home. Still, the mobile experience for productivity apps has declined over the past few years as these products have become increasingly feature-rich and browser-centric.
Smaller models will allow iOS and Android to become true control centers, while new AI-native apps will emerge to make us more efficient and collaborative than ever before.
12.Jake Saper, Partner at Emergence Capital:
The next trend in 2024 will be the productization of services through GenAI. Firms like McKinsey and Ernst & Young will be under pressure to productize, as tech startups like Mechanical Orchard are already using GenAI to deliver better, faster, and cheaper results for their clients.
The combination of AI and enterprise market (AI x Enterprise)
13.Rubrik CPO Anneka Gupta：
In 2024, traditional large enterprises will truly realize the benefits of GenAI in improving productivity, find ways to adopt this technology at scale, and gradually adapt to use within their organizations.
14.ReflexAI CEO Sam Dorison:
GenAI’s continued growth will see software tools become truly integrated into enterprise workflows in 2024. 2023 brings a plethora of additional features, rapid experimentation, and unattainable expectations. 2024 will reveal how well these tools perform in terms of ROI, adoption, ease of implementation, and security.
15.Omni co-founder Jamie Davidson:
2024 will be the trough of disillusionment for GenAI, but the value will start to be reflected in core enterprise workflows and tools as it is thoughtfully integrated.
AI and the real economy
16.Adeyemi Ajao, Partner of Base10 Partners:
2024 will be the year when artificial intelligence and the real economy collide. I believe there will be more success stories exceeding $10 billion in the AI field, and these companies will provide services to the real economy, just like we have seen in the catering industry (Toast, Popmenu), the logistics industry (Flexport, Motive), the food industry (Instacart), like the financial industry (Nubank), uses artificial intelligence to innovate at the application layer rather than entrepreneurship at the infrastructure level.
17. Lan Xuezhao, Partner of Basis Set Ventures:
2024 will be a year of progress in “hard tech” areas such as space exploration, biology, robotics, semiconductors and battery technology, which will drive an increase in venture capital investment in these areas. At the same time, “real economy” industries such as supply chain, construction and real estate will undergo major transformation through AI.
The combination of AI and health industry
18.Insight Partners MD Deven Parekh：
2024 will be the year of continued convergence between biotech and artificial intelligence.
19. BVP Partner Talia Goldberg:
The next big trend in 2024 will be a paradigm shift in health, focusing on promoting health rather than treating disease, and preventing rather than intervening. Using artificial intelligence, data and advanced diagnostics, each person will gain a deeper understanding of their biology, susceptibility and the interventions they need to stay healthy.
20. Kristina Simmons, founding partner of Overwater Ventures:
The next big breakthrough in 2024 will be the use of biotechnology and artificial intelligence to solve health problems, making medical care more convenient, affordable, and providing higher quality care.
Combination of AI and content industry
Tiffany Zhong, founder of 21.nospace:
The next trend in 2024 will be consumers using (and consuming) AI without knowing it.
22. Amy Wu, partner of Menlo Ventures:
2024 will be the year of generative content (some good, a lot of bad), video and 3D will be the next models to develop, and I’m excited about the launch of Vision Pro.
23.ChatGPT’s answer:
2024 will be a year of advancements in artificial intelligence, particularly in areas such as natural language processing, automation, and personalized technology solutions.
24.Bard’s answer:
The next trend in 2024 will be AI-driven personalized experiences that blur the lines between the physical and digital worlds.
Possible troubles caused by AI
25.Felt CTO Can Burn：
In 2024, we may experience our first “Wow” moment caused by artificial intelligence. It could be some high-profile scandal: like the unrest caused by fake news generated by Midjourney + Elevenlabs, or a celebrity claiming an embarrassing “real photo” was actually generated by artificial intelligence. The upcoming 2024 US elections will be an “interesting” backdrop for all this.
In addition, for the first time, a truly pure white-collar company will face layoffs caused by AI. Say Amazon lays off its entire mediation team in the U.S., or Google lays off engineers.
Voice-first AI
26.a16z Partner Anish Acharya:
A big trend in 2024 will be voice-first AI applications. Voice will become an emerging way to interact with technology and become the core of a series of new productivity applications. Large language models can provide voice-first productivity that goes far beyond Siri and other traditional products, which will allow everyone to have an assistant at their beck and call (literally). Audio enables more natural and higher-fidelity interactions, and tools built on this technology will become an integral part of our lives.
27. BVP Partner Talia Goldberg:
2024 will be the year of the rise of personalized user interfaces that are dynamically generated, adaptable to usage, multimodal, and dynamic. This means less chatbot interfaces and more context-aware, voice-first, and generative user interfaces.
Consumer Technology
28.General Catalyst MD Niko Bonatsos：
In 2024, there may be consumer AI applications built by young technology founders with wild imaginations that will be larger than ChatGPT in their first year.
29. Lisa Wu, Partner at Norwest Venture Partners:
2024 will see a renaissance in consumer technology, with science-backed health and wellness products leading the way. Health-conscious consumers are looking for authoritative voices and effective products backed by scientific evidence. This will create new opportunities for physician-turned-founders, whose deep expertise and knowledge sharing earn them a loyal audience in the creator economy.
The trust they build with their communities will translate into cost-effective customer acquisition, strong customer lifetime value and strategic product development opportunities, ultimately resulting in a robust, efficient business.
robot technology
30.Nichole Wischoff, partner at Wischoff Ventures:
2024 will be a big year for the robotics industry. Figure and Tesla are new entrants to humanoid robots, and I expect this field to explode. Traditional companies have already established the infrastructure to manufacture robots. Manufacturing alone represents a multi-trillion dollar market opportunity.
Communication between software and software
31.USV Partner Rebecca Kaden:
One trend in 2024 will be software-to-software communications. Initially, markets and work involved communication and collaboration between people, and later transformed into communication and collaboration between people and software. Now, we are in the transition phase of software-to-software communication – over the next decade, systems will communicate with other systems more than humans will communicate with systems.
This shift requires an entirely new technology stack and will disrupt a host of tools and platforms we rely on. Data, billing, payments, security, monitoring and reporting platforms will all evolve accordingly.
Tough capital markets and financing environment
32. Chad Byers, partner at Susa Ventures:
In 2024, some unicorns will be eliminated. Startups are engines of innovation. It’s a good thing for the world when more startups get funded and try to build solutions to difficult problems. However, for a number of reasons, the past few years have created some unsustainable companies: companies with no apparent PMF but well-capitalized ones. Although we saw some of these companies fail in '23, I predict that '24 will be the year we see a real phase-out.
While this is extremely difficult for many teams and investors, the startup ecosystem needs these events to recycle talent and prioritize capital into the companies that matter most. Startups will continue to be the innovation engine of the world.
33. Charles Hudson, founding partner of Precursor Ventures:
In 2024, startups will rediscover the joy of capital efficiency and take control of their own destiny!
LP Market
34.Beezer Clarkson, partner of Sapphire Partners:
In 2024, LP will continue its pursuit of quality. With exit markets remaining closed, LPs expect capital needs to once again exceed allocations in 2024. This means I expect LPs to continue to carefully evaluate their portfolios, gain a deeper understanding of the underlying health of their indirect companies, and then selectively re-engage with managers they believe can produce outperformance.
I also think there is a strong chance that the number and size of venture fund raises will continue to shrink in 2024. Beyond that, I expect the retirement of some established investors to contrast with the exit of some new investors to start the next generation of venture funds.
The new image of the founder
35. Lan Xuezhao, Partner of Basis Set Ventures:
In 2024, a new look will emerge for successful founders. As the development of artificial intelligence/machine learning accelerates, the image of a successful founder is constantly changing. Traditionally strong backgrounds, often defined by elite academic qualifications and a rich employment history at specific high-profile technology companies, are becoming less important. In the new era of artificial intelligence, “textbook” machine learning engineers may have fewer achievements than long-term open source contributors.
It’s critical for VCs to be able to “see” founders who have a breadth of experience, non-traditional educational paths, career histories and unique personal stories. Those who stick to the old model and judge founders purely on paper credentials will see their returns eroded.
A new working operating system (OS)
36.Rupa Health CEO Rupa Health:
2024 will be a radical shift in organizational culture and the way we build companies. All major economic and technological revolutions have changed not only what we build but also how we build it. Industrial Revolution——>Specialization and assembly line. Software revolution——>Lean startup, agile, rapid iteration. Internet/Cloud/Mobile Revolution—>Screen-based work, distributed teams. Now, the artificial intelligence revolution.
The AI revolution is already changing the way we work, but 2024 will be unique. We will build with deep ambiguity and accelerate the pace of change. Artificial intelligence will replace the core skills we used to recruit for.
One person can increase creativity and productivity 100 times on their own. The best companies figure out new operating systems from first principles. The rest will try to use old methods and miss out. “Best practice” is no longer best practice. In 2024, work will look completely different.
