If you are building a startup you might wish that 2021 were here again. So much capital flowed around the world that many young tech companies were able to raise several times in the span of a single year, unicorn births were announced by the dozen, and IPOs were hot. The ensuing multi-year downturn has proved a sober reminder that the business cycle is just that.
But if what goes up must come down, then what goes down must come up? Maybe, maybe not, but 2024 is looking like a much better year for tech startups than what they were forced to endure in 2022 and 2023. Why? Three core reasons: Many tech companies are expecting a growth rebound next year, venture capital totals could bounce off 2023-era lows, and the IPO market could defrost itself.
Entrepreneurs are a sunny bunch, but who doesn’t love good news? Here’s what TechCrunch+ has reported on each key trend:
- A growth rebound: Digging deeply into public-market results, TechCrunch+ discovered that several many tech companies are feeling bullish about software sales in 2024. In short, 2023 was a year in which many tech buyers tried to optimize their spend; now companies are looking to accelerate and do more. Part of this reacceleration has to do with AI, but not all of it. In short, it appears that the selling market for software — the most common startup product — is going to be brighter next year. Bring on the growth!
- Venture capital off its lows: 2023 has not been the brightest year for venture investment that we’ve seen. In fact, it was worse than 2022 which was worse than 2021. For founders, the downward slope of available capital has been a steadily constricting force. But! Things could be set to turn around in 2024. Why? Interest rates are largely expected to fall next year, which could bolster tech shares and valuations more generally. And, when cash becomes less valuable, cash-rich types hunt for new places to put their funds to work. That dynamic is in part how the 2021 venture bubble got to be so big. Not that we anticipate a return to boom times, but a steadying economy, falling inflation, a new tech trend in AI driving customer interest, and slipping interest rates sounds like a darn fine combination to get venture investing out of its current funk.
- The IPO market, reborn: News that Shein and Reddit are leading IPO candidates for 2024 mean that there are some icebreaking companies heading for the currently frosted-over public market window. Can they shatter the freeze and get deals going again? A little liquidity would do wonders to warm venture and LP wallets alike.
There’s more. One venture capital firm thinks that AI-powered automation is set to make startups more efficient, period. That means less burn, and better overall profitability ratios. Mix in an easier growth landscape and, well, next year could be a rebound period for startups. After a few years of charts pointing down and the right, we’d love to see them flipped upside down in 2024.