Biweekly VC Insights by Uniborn #31

Inside: Six VC forecasts and a handy IRR vs TVPI tool
Barbara Krassner
🇬🇪 Uniborn Team
3 min read

Hey, everyone! We hope your winter festivities were a blast, and you're already turning New Year's resolutions into reality (hello, work-life balance, and goodbye, pointless meetings, eh?). The first scoop of 2024 is here — and there are many more to come as part of our digest series! 

🔥 First, let's glance at how 2023 ended for the private markets

Last year saw the market’s nosedive, then a modest upward trend, and a glimmer of hope. Tech.eu's annual review spills the beans on the European market's crucial figures.

Image: Tech.eu Annual Report 2023
Image: Tech.eu Annual Report 2023

For more info, check the Tech.eu paper.

🔥 What 2024 is cooking for the VC industry?

Andre Retterath, partner at Earlybird Venture Capital, attempted to answer this. Here's a sneak peek of his predictions (some of which are also relevant to angels):

1. The VC scene is in for some natural selection drama — blame it on overvalued companies, fundraising rollercoasters, and generational shifts.

Andre underscores, "This will most likely hit firms that were founded in the rising market of 2010-2018, as they’re old enough for LPs to require KPIs (raising 3rd generation+) but too young to have distributed tangible money to their LPs. Hereof, they either cut headcount to extend runway into hopefully more friendly market environments, close shop, or join forces with other firms."

2. The exit window is predicted to swing open in late 2024/early 2025, assuming the world doesn't go bananas with elections or wars.

3. Three VC models will rule the roost, and the "in-betweens" will vanish into thin air. Think high-performing boutique funds, mega-billion funds, and the hybrid "barbells."

Andre emphasizes, "The funds that started small and grew but neither became an established mega fund nor created a barbell platform will die as they’re too big to deliver outsized performance (compared to boutiques) and too small to attract large institutional investments (compared to mega funds)."

4. Getting preferred access to deals is still the golden ticket, but it's tougher than ever. Paying top dollar and flexing a solid investor brand are also the keys.

5. FOMO and pre-emptions are set to rule 2024 — less snooping around, more speed. Europe's catching up with the US on this one.

6. Get ready for data & AI takeover causing massive disruption. VC players are increasingly hiring data gurus or using investtech tools to divert their time to more valuable tasks.

Andre talks of a perfect storm, "Today, we have all the ingredients at hand: large-scale computing, broad availability of private company data, and intelligent algorithms. In 2024, I see our industry moving from attention and interest to desire and action. The VC industry finally becomes more data-driven."

For more info, check Andre Retterath's article.

🔥 What else is on the horizon?

  • Funds eyeing PE secondary transactions are sitting on a mountain of dry powder, and continuation funds are about to have a moment.
How сontinuation funds have grown in popularity in recent years in the US, for example. (Image: PitchBook)
How сontinuation funds have grown in popularity in recent years in the US, for example. (Image: PitchBook)
  • PE funds might cling to their investments longer due to a backlog of assets and a slow exit dance.
These are the highest holding numbers since 2015 and 2012, respectively. (Image: PitchBook)
These are the highest holding numbers since 2015 and 2012, respectively. (Image: PitchBook)
  • A lean capital formation year may mark 2024 amid sluggish exits. But looking at Europe, PitchBook analysts foresee a glimmer of hope for VC fundraising.
PE exit value hit decade-low. (Image: PitchBook)
PE exit value hit decade-low. (Image: PitchBook)

And some intriguing stats to wrap things up: in the opening week of this year, in the European tech ecosystem, Tech.eu's radar caught over 25 funding deals, gathering €582 million, not to mention more than 5 exits and M&A deals in the European tech ecosystem. Now, rewind to the final week of 2023 – 15 funding deals, netting over €84.4 million, and a single exit. 

For more info, check the PitchBook analytics.

🔥 As a cherry on top, here's a little treat from Uniborn

Just in case you're in need, our founder, Dmitry, whipped up a nifty spreadsheet to compare IRR with TVPI. Cheers to making your financial life more manageable! 

Cover image: Unsplash

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