TLDR:
- Venture investors plan to spend more in 2024, according to a Kauffman Fellows sentiment survey
- Investors predict a pickup in investment pace compared to 2023, but founders will face higher hurdles to raise capital
Kauffman Fellows, a 30-year-old organization, conducted a venture sentiment survey revealing that around 53% of investors believe 2024 will see increased investment compared to the previous year. However, founders seeking capital will need to demonstrate growth and reach break-even to meet the higher standards set by investors.
The survey, which included responses from 260 participants across 200 firms, highlighted that fundraising is currently challenging for venture firms. While some expect cutbacks from endowments and foundations, sovereign wealth funds and family offices are stepping in to fill the gap. Despite the challenges, around 50% of respondents are optimistic about raising their next fund, although timelines for fund investment and divestment have extended.
In terms of exit strategies, M&A remains the leading option for 2024, with secondary strategies also gaining prominence. Fewer funds are banking on IPOs as an exit strategy. The survey also noted an increase in secondary investments, with venture funds establishing secondary funds to invest in projects.
Interestingly, the survey did not show Silicon Valley as more optimistic than the rest of the world, particularly in the context of the growing venture industry internationally. Countries like Brazil and Indonesia, despite receiving substantial funding in recent years, still have room for growth in their venture ecosystems compared to the U.S.
