‘Past the bottom’: Venture capitalists on what’s in store for 2024

Elicia McDonald, Partner at AirTree We’re past the bottom of the cycle and starting to see green shoots that suggest 2024 is going to be a stronger year for tech startups after a challenging few years. Many startups coming back to fundraise in 2024 have worked hard to extend their runway and improve their capital efficiency. In 2024, capital-efficient growth stories will continue to be highly valued by investors.

Fortunately, Australia fares very well in this regard–we’re one of the most capital-efficient producers of billion-dollar tech companies in the world. Despite the challenges over the past couple of years, the ambition of ANZ tech founders continues to grow. We’re witnessing a huge acceleration of innovation in software, driven primarily by AI.

In 2024, we’re excited to see more applications built on generative AI infrastructure to solve real-world problems that founders understand well. Lucy Tan, Principal at Square Peg There has been a lot of healthy pre-seed and seed activity this year which I would expect to continue into 2024. Later stage capital has been more challenging this year for startups to find, except for those in the top decile.

I would expect two things to happen in 2024: 1) startups sitting on huge piles of cash raised in 2021/22 will get towards the end of their runway and need to raise or close down and 2) founders’ expectations around valuations anchored to their last round will adjust given the extended period of muted late stage activity. Of course there are always pockets of exceptions – generative AI startups will likely continue to attract mega rounds and valuations but for the infrastructure and foundational model layers, I would expect most of that activity to come from Israel (where we have a presence), the US and China where AI talent is concentrated. In ANZ, I expect to see more startups emerge in the application layer i.

e. now that we have this incredible capability, how do we use it to solve deep domain-specific problems that couldn’t be addressed before? We’ve been meeting with some exciting companies looking to disrupt functions and verticals as diverse as sales operations, customer support, logistics and legal. Michael Tolo, Partner at Blackbird Going into 2024, we are more excited than ever.

The pool of exceptional Aussie and Kiwi founders continues to grow (along with their ambition) and momentum across AI and deep tech means the next 12 months are looking very promising. AI has advanced much faster than we could have expected and is now being embedded into almost every new software product that we see. It takes fascinating forms – from empowering faster and better decisions across our healthcare system with Harrison and Heidi , to Clove , a marketplace that helps make cooking and meal planning easier.

We are also excited to double down on deep tech. We know that Aussie and Kiwi researchers can stand toe-to-toe with (and beat) the best overseas but only a small fraction of that talent has made its way into startups over the last decade. We are starting to see our first generation of deep tech startups – including PsiQuantum , Fleet Space and Sundrive – emerge as leaders on the global stage, and a precocious next generation inspired by their success.

If the ecosystem continues to support the talent, then decarbonisation, quantum technologies and interventional medical devices will be themes to watch for the next decade. The best founders are doing their life’s work, and that level of passion does not wait for interest rates. Our role remains the same no matter the economic environment: to find founders with enough spirit to bend the future to their will and offer our support from the beginning of their journey.

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