"For decades, the average investor could hardly obtain something besides stocks and commodities. Luckily, the landscape is transforming, and venture becomes more about folk and less about the top 1%." I penned these thoughts six months ago, and as we entered the new year, it became an opportune time to assess the ongoing progress in venture market democratization.

What's in store for 2024?

My bet is that 2024 won't be as disruptive. Somehow, it may be even quirkier than 2023 (remember Sam Altman's firing and return? lol), and yes, it still may pose new challenges (fingers crossed that the wave of elections doesn't send the world into a frenzy).

But all in all, 2024 is shaping up to be a stabilization period, reinforcing the ongoing trend of easier access to venture capital.

What do I mean by that? The venture space holds an entry point, and it won’t lower on its own. On the contrary, it is set to rise — both in terms of investment amounts (at least compared to 2023) and the networks and expertise to share with startups. Nevertheless, investors will be better equipped than ever with new technologies and tools, be it syndication platforms or decentralized communities. These resources will eliminate routine and facilitate faster connections to people and information.

What about specifics?

Well, it seems that…

1️⃣ Small venture capital investors are set to consolidate further. Angels will join forces in syndicates, while micro-funds will form groups, and so on.

Why? Because times are still tough, and larger VC firms, fueled by accumulated dry powder, are gearing up to be more assertive, even aggressive. 

2️⃣ The venture industry will keep going through a purge. The self-purification process will comprise "zombie investors" and "VC tourists" — those who were tempted by the 2021 rally but now have no clue how to survive in the new brutal reality.

That's not just my opinion. (Image: Х)

Andre Retterath, partner at Earlybird Venture Capital, agrees. (Image: DDVC blog)

And this is a trend not only for 2024 but also for the next few years. (Image: Х)

3️⃣ Another risk group is the "middle class," funds from 50 to 250 million. Expect their population to shrink.

Why? Small funds thrive on flexibility and close-knit relationships with founders. Megafunds boast a robust reputation and a safety margin. So crises bring on the most challenging times for an average VC, and with the current issues persisting into 2024, this year is unlikely to bring complete relief.

Andre even suggests combining the best of both venture worlds. (Image: DDVC blog)

This is his recipe for success. (Image: DDVC blog)

4️⃣ LPs will prepare for more risk, which will be compounded by higher expectations of GPs' skills and reputations.

Why? The last four years of intense stress (COVID, wars, AI boom) have undoubtedly elevated people's risk tolerance as well as adaptation requirements. The sharp rise in interest rates has slowed down this process, but not as much as we might have expected. The imminent start of rate cuts is likely to act as a springboard for investors' risk appetite. So, as Deepka Rana, a principal at North Zone, aptly noted, it's "healthy paranoia," aka cautious optimism.

GPs expectations also rose last year, and now the trend intensifies. (Image: Х)

5️⃣ We’ll see the rise of new ways to reinvent the venture market and open it up to the general public. While my optimism about the timing may be biased, there's a strong belief that this transformation is destined to occur.

Why? The venture industry is a game with myriad intrinsic issues, and adverse selection being the most well-known, which for now appears to be an inherently stubborn factor.

But the game is changing. We're going to discover new and disruptive approaches to getting people into venture. Perhaps without explicitly labeling them as "venture." 

Like following the basic tenet of the theory of inventive problem solving — "the best system is one where there is no system at all, but the job gets done." 

I strongly recommend keeping a watchful eye on Uniborn, folks!

Cover image: Unsplash