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Future of Capital Allocation

Your weekly newsletter on the fast-evolving world of investing

 
The week's developments in investing & technology, explained | 11.01.24

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Last year saw founders grappling with the harsh reality of venture capital tightening and startups collapsing. Now new data shows VC activity closing a lacklustre 2023 with tepid Q4 figures. Does fundraising sluggishness pose a risk to capital markets moving forward?


Meanwhile, optimistic predictions for 2024 IPO markets face tensions as public investors remain wary of private equity-backed IPOs. Plus, following 2023's AI funding surge, some leading VCs think the sector is maturing from the initial hype cycle toward more robust AI enterprises.


Read on for more, including some 'don’t miss' insights into VCs' evolving AI investment strategies and this week’s noteworthy deals.

 

—Charlie and the Research & Intelligence Team


 

The investment ecosystem


💲 The Global VC market continues to stumble. A tepid final quarter capped off a lacklustre year in VC investments for startups, new pitchbook data shows. Investors warn that 2024 funding activity could be set to follow from where 2023 left off.

 

📉 US PE firms struggle for exits: 2023 marked the US PE's bleakest year in dealmaking since 2016, with capital allocation dropping by 29.5% and exit values falling over 26%. Faced with challenging valuations, investors eagerly await a revival in exit strategies.

 

💰 IPO tensions are rising: Banks are bracing for an IPO resurgence in 2024, fuelled by PE's liquidity needs. But while there's optimism in the space, success of the IPO revival will hinge on convincing sceptical public investors to embrace these new offerings.


 

Chart of the week



In 2023, venture deal volume plummeted to £228.3 billion, a steep 38% decrease from 2022's £369.9 billion, with significant reductions in funding across all stages.

 

How AI is transforming investing 

 

🤖 Is AI investing maturing beyond the hype? Post 2023's funding frenzy and OpenAI boardroom dramas, VCs are predicting a shift from the investment hype to more sustainable businesses — favouring applications with deep insights into end-user needs and industry-specific data.


💸 Goldman Sachs' Oppenheimer heralds a new AI-driven economic super cycle: This cycle could usher in a period of rapid technological innovation on the back of AI-driven productivity improvements. According to Oppenheimer, the transformational shift would be “akin to what we saw in the late 19th century”.


Startups


🗣 Founders are bracing for a mental health crisis amid funding constraints. Even serial founders — who are no strangers to hard times — are experiencing unprecedented levels of stress and anxiety. With capital markets likely to continue the downturn, is it time to lift the taboo on mental health?

 

💼 German startup Pitch switches CEO and lays off two-thirds of its workforce. The presentation software startup is scaling back its workforce with its CEO Christian Reber also stepping down. Reber announced on LinkedIn that “going forward, we’ll be a significantly smaller team focused on creating maximum value for our customers”.

 

Jobs



 

Noteworthy deals


  • Vico Therapeutics, a Netherlands-based genetic medicines company has raised £47.2m in series B funding led by Ackermans & van Haaren.

  • LUMA, a San Francisco-based startup advancing AI for 3D model generation has raised £33.8m in series B funding led by Andreessen Horowitz.

  • Anecdotes, an innovative leader in enterprise GRC (Governance, Risk and Compliance) technology has raised £19.7m in a series B funding round led by Glilot Capital Partners.

  • LEM Surgical, a Switzerland-based surgical robotics company raised £20.3m in a series B funding round.

  • Artelize, a performing arts AI platform, successfully secured £860k in a pre-seed funding round led by Bjørn Bruun, Founder of Danish fashion brand Bruuns Bazaar and active angel investor.


 

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Disclaimer: This content is for informational and educational purposes only. It does not constitute financial, investment, legal or tax advice.

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