Our Favorite 2024 Forecasts for the VC Realm

In the ever-evolving world of venture capital, the annual ritual of foreseeing the future takes center stage. As the anticipation for the upcoming year builds, we embark on a distinctive journey, curating a set of predictions that stand out in the venture capital landscape. These insights promise to influence the narrative of the tech sector in the intriguing year – 2024.

  1. VC Ecosystem Rejigs

    In 2023, the VC ecosystem faced a landscape marked by partner exits, new fund managers, and shifting priorities. One may expect the focus on early-stage investments to continue, particularly in AI startups positioned for acquisition by tech giants. Deeptech and AI emerge as key investment theses. Following a trend from 2023, VCs prioritize exits, while upheavals at firms like Lightbox and Omidyar Network India hint at potential portfolio consolidation. The industry grapples with substantial dry powder, which may be earmarked for pre-IPO and late-stage rounds. Larger funds pivot from seed to late-stage investments, driven by the need to deploy capital before expiration.

  2. Profitability among Consumer-Techs

    India’s consumer-tech landscape is rapidly evolving, spurred by an increasing demand for convenience. In the first week of 2024, while expectations were that consumer services would get costlier, Zomato and Swiggy took the lead with a notable 33% fee hike. This trend is poised to permeate various sectors, encompassing rapid commerce, ride-hailing, and potential price adjustments in OTT services. Quick commerce players are swiftly following suit, incorporating comparable approaches by introducing modest fees like order handling or packaging charges.

  3. Rise in Secondary Transactions

    In 2024, excelling in the VC industry will hinge on individuals deeply embedded in the ecosystem. The anticipation of a surge in secondary transactions is driven by various factors, such as a substantial amount of dry powder, an expected decrease in the bid-ask spread in secondaries, the enduring demand for liquidity among LPs, and continuous market innovation. It’s vital to note that those with insider knowledge and robust relationships will secure top-tier deals. Transparency concerning asset performance and exclusive connections will play a crucial role in ensuring precise pricing and proprietary access to promising opportunities.

  4. Gen AI Hype?

    Despite the remarkable strides in LLMs, the question arises: is there sufficient market demand from enterprise organizations to validate the substantial investments poured into this sector? Anticipate the potential fate of numerous seed-stage startups, with prospects of either folding or redirecting their focus toward solving more substantial, less hyped-up business challenges.

  5. Fintech World & Jio Financial Services

    Jio Financial Services (JFS) is poised for a significant presence in 2024, building on its disruptive entry into the fintech sector in mid-2023. As a subsidiary of Reliance Industries, the conglomerate has consistently expanded its financial offerings and is gearing up to amplify its impact this year. Despite assertions that any industry entered by Reliance is prone to disruption, some experts believe that fintech incumbents need not be excessively concerned. In the fintech industry, where niche focus and digital expertise are pivotal, technology remains a significant competitive advantage.

  6. Rise of Specialized Funds

    Limited Partners are inclined to invest in fund managers boasting established experience or specialized expertise. Therefore, new managers should prioritize constructing teams that align with this preference. Those deeply entrenched, whether through a legacy or specialization, are perceived as more attractive as potential primary investment opportunities, especially in a volatile market. This principle closely aligns with the SMK Venture fund thesis, emphasizing that emerging GPs need to stand out in the competitive landscape by providing a heightened level of appeal and innovation.

  7. It’s Policy Time

    A fresh batch of policies is brewing on the horizon, ready to bring some breezy challenges for ed-tech, e-commerce, fintech, and big tech. The National E-commerce Policy, the social security code for gig workers, and the Digital Personal Data Protection Act might just be the gusts of change we’ve been waiting for. Let’s watch as companies adapt to disruptions in their structures, potential profit impacts, and increased scrutiny on user data handling.

  8. The Vote-War Impact

    As 2024 gears up for elections in 50+ countries, featuring economic giants like India and the US, and with rising global tensions, companies eyeing the public markets face a challenging dance. The General Elections in India, along with concerns over China’s actions and North Korea’s war readiness, contribute to an unpredictable environment. Recent events, like the October escalation of the Israel-Palestine conflict, have negatively affected domestic markets. CapitalMind notes that geopolitical risks create uncertainty, leading to risk aversion and potential short-term declines in stock prices. Lightspeed Venture Partners’ Anuj Bhargava highlights that investors tend to be cautious during significant political events, waiting for outcomes before making substantial decisions, with IPOs being particularly pivotal.

As these predictions unfold in the dynamic landscape of 2024, only time will reveal which prophecies come to fruition and how they shape the tech narrative. Share your favorite predictions and thoughts on how these peculiar insights will play out in the ever-evolving cosmos of venture capital with SMK Ventures. Follow SMK Ventures Ventures and get in touch to delve deeper into these forecasts!

– Disha Shah – AVP – Investments

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