š® (Prediction) Season's Greetings!
As we conclude 2023, we are sharing different articles and podcasts to keep you thinking through the holidays!
Seasonās Greetings & Happy Winter Solstice, if youāre in the Northern Hemisphere!
'Tis the season for family, cooking, and of course, predictions! Because I am not sure the world needs another set of VC predictions š, rather than craft our own, we are sharing our favorite 2024 outlook reports and a few articles/podcasts.Ā
Itās hard to believe this is the last newsletter of the yearāthank you for tuning in every two weeks! We appreciate your support and wish you and your loved ones a very merry holiday season and a happy new year!
š„ 2024: The Glass is Half Full
KKRās report, Glass Half Full - Outlook for 2024, is a departure from what we normally feature, but itās a thorough read on the macro environment and the various opportunities and challenges going into 2024. Yes, the report outlines some headwindsāgeopolitical tension, high interest rates, and slowing growthābut it also discusses thematic areas, such as aging demographics and the need for more supply chain resiliency, that are creating tailwinds for businesses tackling issues within these areas. Additionally, it discusses global and regional economic forecasts, along with expectations across capital markets.
STV Take: This report is dense, and if you only read one section, Iād recommend flipping to pages 66-69 for a lowdown on consumer spending. Itās been hard to parse out exactly what is going on with consumers, but this report does a good job of breaking it down from a couple of different angles. One stat on employment that I found particularly surprising: 81% of job gains in 2023 were created in the following three categoriesāhealthcare/education, government, and hospitality/leisure.
šļø 2024 US Venture Capital Outlook
Pitchbook released their predictions in their latest report, ā2024 US Venture Capital Outlookā. In it, they forecast what will likely shape the VC landscape in the next year. Notable trends include the following:
A return of IPOs!
With the potential of interest rate cuts, there will be more deal activity, especially among corporate venture capitalists.
The number of insider rounds will remain elevated.
STV Take: This report gives several reasons to be optimistic. Dry powder is out thereāover 4K funds have been raised since 2020āand while the anticipated amount of capital predicted to go into new funds in the next 12 months will be lower than 2022, it is still expected to be in line with 2020, a historically good year for fundraising, at least until 2021. Of course, all of this depends on investors seeing liquidity from prior investments, which should happen if the prediction around IPOs holds true.Ā
š©ŗ Digital Health & the Innovation Maturity Curve
Rock Health released an article that explores the various levels of maturity of different segments within digital healthāAI, caregiver solutions, data interoperability, digital obesity care, food as medicine, retailers as providers, and value-based care enablement. The Rock Health team was inspired by the Gartner Hype Cycle and used research publication volume, venture funding, and partnership activity to place these seven areas along a maturity curve. Retailers as providers and data interoperability are identified as the most mature out of the segments. Food as medicine is most nascent but represents a unique opportunity for organizations to be first movers in adoption.
STV Take: Even if your company isnāt in healthcare, the nascency of the space where youāre building has implications for fundraising and customer adoption. If a market is still early, a founder might need to demonstrate to investors stronger proof (not necessarily revenue but some type of compelling, unique insight) of a real venture-sized market opportunity. However, if youāre building in a more mature space with lots of competition, fundraising might be harder if investors think the category makers have already been crowned. In our experience, the sweet spot for Seed investors along this curve is usually between nascent and emerging.
š§ A FinTechās First Customers
A16Z recently launched a new podcast, My First Sixteen, which interviews fintech founders to discuss how they acquired their first customers. There are currently five episodes that feature founders from well-known companies, like Plaid and Marqeta, discussing a range of topics from their earliest days of building and finding product-market fit.Ā
STV Take: In full transparency, Iāve only listened to one episode, āCompeting in a Crowd of Incumbents with Mercuryās Immad Akhundā, but I have already added the rest to my holiday queue. I thought the insights from Immad were particularly detailed and helpful in thinking about growth in the early days. He discusses Mercuryās GTM journey, including how they grew organically in the first two years and later hired a salesperson to see if they had a repeatable sales process before bringing in anyone more senior. Shocking fact: Mercury hired a VP of revenue only a year ago.
š“ Decompression Zone
As Iāve mentioned previously, I love to cook and this time of my year is my absolute favorite time to bake. If youāre looking for an easy, crowd pleasing treat this holiday season, I give you this recipe for Maple Pecan Shortbread Bars. These bars are a twist on pecan pie and both easier and more popular than any pecan pie Iāve ever served.
š Enjoy & see you in 2024!