What I'm preparing for in 2024

Seven themes that I believe will define the year.

Welcome to issue #52 of next big thing.

Good morning, 2024. It’s the new year here in New Delhi where I’ve been spending the holidays with family.

Last week, I published a compilation of ideas from 50 tech thinkers on what the next big thing will be in 2024.

Today, I want to offer my own thoughts on what I believe will be the themes that define the year ahead. The first six pertain to my world of technology startups and early-stage venture capital investing, and the final one is something that I think we will all unfortunately be forced to think about.

My plan is to grade these predictions at year-end — “did I mentally prepare myself well for what was coming this year?” — and perhaps I’ll take a crack at analyzing the contributions to last week’s post as well. As always, I welcome your feedback.

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Fundraising Frenzy

Venture capital fundraising slowed considerably in the U.S. in 2023 (Q3 ‘23 was the lowest total dollars of new investments in a quarter in 6 years), after slowing down in 2022 more than 30% from the peak in 2021. But what we’re going to see in 2024 is a bit different — there will be a frenzy of companies trying to raise capital because they need to raise capital. That wasn’t the case for the past two years, especially because so many companies raised money in 2021 and have had enough runway to ride out 2022 and 2023 without raising more. Couple this with lower interest rates, with continued excitement for making new investments in early-stage companies, with founders having multiple reasons (AI and other trends as enablers, layoffs and a lack of quality job opportunities as a forcing function) to go start companies, and this leads to a very, very busy year for venture firms. Lots of new companies will get funded, companies that are progressing well and have real product-market fit will raise follow-on rounds (at lower valuations than the founders desire), and unfortunately there will be many companies unable to raise that will therefore have to make tough decisions.

IPO Readiness

There are a number of late-stage companies that are thinking about going public — the latest PitchBook-NVCA report estimates 75 companies in the IPO backlog — but I don’t expect many of these will actually go public in 2024. These companies are trying to make sure they have predictability in their revenue growth, at least six quarters of strong and consistent financial performance, profitability or a very credible path to get there, and management teams and boards that are ready for being public. Some companies are well on their way to all of the above, but most are going to need this year to get there. As interest rates lower, and the IPO window starts to crack open, “getting ready to go public” will be the goal at a lot of companies, with the plan of actually doing so in 2025.

AI Rollercoaster

AI is going to be everywhere this year. Some of the most promising companies will be ones that are growing very quickly in users, customers, and revenue, with products that are AI-enabled or lay down important AI infrastructure. But there will also be AI backlash — from those who sue foundational models for using copyrighted content in training data (as The New York Times is doing in suing OpenAI and Microsoft), as well as those who worry about AI safety (such as the faction at OpenAI that was perhaps some of the reason for the drama a few months ago). It’s going to be a bumpy ride, particularly for the companies building models, and the lawsuits and safety concerns will slow progress. But I am excited to watch the applications that gain consumer and enterprise adoption — products like ChatGPT, ElevenLabs, EvenUp, Glean, Harvey, HeyGen, MidJourney, Perplexity, ReflexAI (where Footwork’s an investor), RunwayML, which all seemed to have deepened or found exciting signs of product-market fit in 2023. That list should be much, much longer at year-end.

Crypto Usefulness

It feels like 2024 could finally be the year where we see several useful, real world applications of crypto, beyond store of value and speculation. There are a few reasons for this:

1. Talented and non-hype-driven builders have been working to build products, enabled by crypto technology, that end users love, during the crypto winter of the past few years.

2. Crypto assets have had a great year (Bitcoin up 2.5X, Ethereum up 2X, Solana up 10X), Coinbase (the leading crypto exchange in the U.S.) has had very strong stock performance this year (up 5X), Bitcoin’s 4th halving will take place in April, Bitcoin ETFs are likely to get regulatory approval, and all of this activity leads to more incentive for crypto builders to build real-world, useful applications in decentralized finance (DeFi).

3. The centralization concerns in AI, as evidenced by the drama at OpenAI, give more credence to decentralized approaches in AI and other sectors, which could be enabled by crypto and blockchain technology.

We’ve now been through many high and low cycles, builders have been building for a while (Bitcoin’s been around for 15 years, Coinbase was founded 12 years ago), and it just feels like the right time based on all of the above for some really interesting products, that deliver great user experiences and just happen to have been enabled by crypto technology, to gain end user adoption.

Consumer Health

In 2023, consumer health was the sector in which we saw the most number of interesting early-stage investment opportunities at Footwork. We spent time with several companies in areas such as diet and nutrition, weight loss, mental health, neurodivergence, addiction treatment, with services paid for by insurance and delivered virtually, that were seeing early exciting signs of product-market fit in a short period of time post-launch. I expect this will continue to be a fruitful area to build and invest in in 2024, with continued growth in demand for GLP-1s (weight loss drugs), mental healthcare, and preventative medicine covered by insurance, as key accelerants. It remains to be seen what is defensible about some of the startups in this area, and how they ultimately get valued at exit, based on the services nature of many business models.

Vision Pro

The most exciting consumer product launch of 2024 is likely to be the Apple Vision Pro. No one does hardware and launches like Apple, and though the price point of this product is high ($3,499), limiting the addressable market, I expect that Apple’s strategy of limiting supply will lead to Vision Pros being in high demand. The early reviews of those who were able to test the product in 2023 were very positive. I think we’ll see a lot of excitement from those who are able to get their hands on Vision Pro, and we’ll see startups specifically calling out the Vision Pro as their “why now?” as they rush to build compelling applications for the platform. TBD on whether the product becomes mass-market enough to yield massive new companies at the application layer.

Political Chaos

Unfortunately I believe that a year from now we’ll be dealing with the ramifications of the 2024 U.S. Presidential Election more than any other event in the year. The problem we have is that, whether Trump wins or does not win, chaos and turmoil are guaranteed. While I hope that it does not happen, there’s a good chance that he does win, and I worry about the uncertainty that could cause, given the unpredictability of his actions, and in a world that feels increasingly tense. The markets may rally of course — political uncertainty does not necessarily mean economic chaos — but the longer-term impact on America’s democracy is what will keep me and many others up as we end the year.

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I started next big thing to share unfiltered thoughts. I’d love your feedback, questions, and comments!

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