The Outlook for Tech Startups in 2024
Over the past year, VCs have been forced to pull back with the rocky economy. However, ambitious entrepreneurs and startups still want to take a chance at changing the world. That leaves us with two pressing questions: how will the tech scene reset in 2024, and what industries and technologies show signs of life?
Small Cap Growth
The market at the end of the year finished strong. While 2024 may not be the same rebound we saw in 2021 for Tech, VC firms and Startups are still playing the long game, with plenty of money still on the sidelines. While we may not see the large, late-stage growth rounds we saw during the aberration of 2021, smaller early-stage startups are on the rise. As many large tech firms continue to stagnate and see slow growth, I predict that small-cap stocks and smaller valued startups will show signs of life in 2024, focusing on developing technology for Main Street America.
Emphasis on Main Street
As the founder of Punchey, which serves as a payment platform for local small businesses across the country, I’m seeing a lot of potential for vertical SaaS platforms in 2024 — which have been a lucrative commodity for VCs over the last two decades. We’re seeing a white space for tech companies that are developing a vertical tech stack for Main Street America, as opposed to corporate America. Main Street is a critical part of the economy (and America’s largest employer). A dollar spent at a local business stays in the economy, as opposed to a dollar spent at a corporation, where only around 40% stays in the local economy (source). So what’s the keystone factor to all this? Small business owners hiring skilled workers will be the biggest factor for business growth in 2024 (source), and tech companies need to keep up by building the right technology to assist small business owners and their growing forces of skilled workers.
When looking for industries and startups that will thrive in 2024, we can only give our best impressions based on what we saw in 2023 and our intuition. While startups leveraging generative AI will clearly be a major sector for investment, they still face tremendous regulatory scrutiny fraught with challenges surrounding data privacy and bias. Companies developing tech for manufacturing, cross-border payments, Mobility-as-a-Service (MaaS), and leveraging big data and digital insights for road safety have strong potential for 2024.
Raising Capital in the 2024 Landscape
Tech valuations may be hitting a historic low, which means there are plenty of options to buy! Many firms that experienced growth spurts in 2021/2022 have been valued down and corrected — making them more realistic and viable investments. This opens the floor for potential VC funding and a very competitive market.
Below are a few tips for raising capital in 2024:
Prove Growth Potential: You need to be able to highlight how your company can be growth-worthy (and not necessarily profitable) during the next few years. With global issues and an upcoming election, prove how your company can be immune to cyclical or external factors.
Continue to Network: Leverage social media, industry events, your personal network, and friends from your university. These are often the best ways to get your name and idea out there.
Hire a Strong Team: With many big-tech firms laying off employees over the last year, it’s a great time to look for high-quality candidates who showcase the strength and experience of your team as a young startup. Show strong leadership skills and an emphasis on DE&I.
Be Honest and Credible: The past few years have been littered with obvious challenges; don’t try to sugarcoat things. Instead, prove that you are honest and credible, and be transparent about the challenges you’ve faced as a leader and the risks you’ve taken as an entrepreneur. Be solution-oriented and prove how you did (or will) overcome the odds.
It’s going to be a tough year for startup founders, but those who are ambitious and positive can make the best out of the coming year. Despite a turbulent market, political dysfunction, and more issues, the 2023 economy experienced the soft landing we all hoped for. The market is now corrected and rightsized, opening the playing field for startups and investors seeking long-term opportunities this year.
About Nathaniel Stevens:
Born in New Haven, Connecticut, Nathaniel Stevens has always focused on what awaits beyond the horizon, looking to new advancements and conceptions through technology, media, and business opportunities.
Nathaniel’s journey began while attending the Wharton School at the University of Pennsylvania, where he concentrated on Economics. He proved to be a keen member of the entrepreneurship and technology community, and in 2005, Nathaniel’s acceptance into Wharton’s Venture Initiation Program allowed him to start turning creative ideas into commercial realities. Nathaniel began to develop Yodle (Acq 2016 Web.com), an enterprise that would enable small businesses to increase profits through accessible Internet advertising.
Nate’s passion for exploring the next frontier would inevitably guide him to his next venture, Punchey Inc., a one-stop solution designed to help promote, market, and advance trade between local businesses and consumers through a cloud-based payment system. With this approach, Nathaniel aims to help consumer-facing companies streamline their businesses over the counter, over the phone, or on the go. In tandem with Punchey, Nate also founded Stevens Ventures, an investment fund offering the possibility to explore new and innovative models in consumer markets by providing private equity investments in early-stage private companies run by exceptional entrepreneurs.