3 Major VC Fundraising Trends Of 2024

When starting a new company, one of the most important issues to take care of is securing adequate financing. Entrepreneurs can choose from various types of solutions, venture capital (VC) being among the most popular options. Earlier, Anand Jayapalan had spoken about how Venture Capital is a type of private equity that funds small, high-risk businesses with the potential for rapid, long-term growth. This high-risk investment, often in the form of seed or early-stage funding, and provides significant opportunities for high returns.

The domain of venture capital has significantly evolved over the years. Here are a few venture capital trends that startup founders should be mindful of in 2024:

• Tech mergers: 2024 is likely to be a standout year for tech mergers and acquisitions. Both private and public tech companies are likely to be poised to access large amounts of capital, which assists them to build new partnerships and acquire new customers. Selling would seem like the best possible option for startups struggling to fundraise due to high-interest rates and VC valuation caution.  Public, as well as large private tech companies would leverage their strong balance sheets and access to significant sum of capital to inorganically attract customers, add key distribution channels and partnerships, as well as boost adjacent product offerings.

• Cross-border payments: Payments have been an important area of growth over the last couple of years, and cash usage has declined. The rise of Fintech has paved the way for new ways to move money and make swift payments. Emerging startups often use digital wallets, blockchain and other cutting-edge technologies for cross-border payment. The use of AI has also become popular to reduce fraud. Fintech startups specializing in cross-border payments have high odds of attracting VC investments due to the expansion of digital wallets and real-time payment systems. Additionally, VCs may focus on e-commerce startups that provide specialized payment solutions.

• Bridge rounds for later-stage startups: In order to attract new capital, interim bridge rounds might be used by startups that have advanced to the late stage and cut their expenses. These investment rounds are meant to help startups “bridge” the gaps of time between larger funding rounds. For instance, more strategic bridge rounds aimed at product launches and market expansions are likely to become popular in 2024.  Economic conditions and market trends have a major impact on bridge rounds, and hence investors need to adapt their strategies accordingly.

Venture investments are anticipated to stabilize in 2024, with financing projected to rise due to the advent of AI. Globally, the volume of VC funding is on an upward trend, and late-stage startups are expected to draw considerable investments. Over the past several years, venture capital funding has experienced fluctuations, yet the industry has overall witnessed substantial growth. The largest investments have been directed towards technology, healthcare, and innovation.

While discussing VC funding, earlier, Anand Jayapalan had underlined that this financing option is a good source for raising money for new companies that have a limited operating history.  As such businesses generally come with high risk and high cost, external capital has to be sought to reduce the risk of failure. In return for taking the risk through the investment, VC investors are able to obtain equity and even voting rights in the startups.