The Fundraising Outlook for 2024, According to New York VCs
As we close out a challenging year for venture activity, early-stage founders are looking ahead to what 2024 will bring. Will it be a bounce-back year for dealflow?
At an event we hosted this month, we asked a group of leading New York investors and fundraising experts to share their predictions with an audience of early-stage founders in the Tech:NYC network. The session was jam-packed with advice on measuring growth in a down market, pricing new rounds, and building teams that increase investor confidence.
There were far more questions than we could get to, so we circled back with our guests — AlleyCorp general partner Marshall Porter, Stellation Capital managing partner Peter Boyce II, and Carta’s head of VC and accelerator business development Ryan O’Conor — to get reactions to the ones that were left.
Here’s what they had to say:
How to optimize fundraising success in 2024
Fundraising while starting a business can often feel like a distraction. VC heads recommend doing it quickly, but not recklessly, so founders can focus more on their business model and mission. When structuring a fundraising round, “develop a socialization strategy, where you map out both founders and investors connected to the investor candidates you’re spending time with,” said Peter Boyce II, founder and managing partner of Stellation Capital, a Brooklyn-based VC firm focused on pre-seed and seed stage investments.
It can be intimidating to pitch or even reach out to VCs, especially in the earliest stages of a startup. Marshall Porter, AlleyCorp’s general partner leading its Diversified Technology team, recommends testing out strategies with firms that aren’t your first choice, feel out what works, and then move to your top choices: “Know who at each firm is the person you want to target and find multiple warm intros to stand out,” he said.
Each of the investors we spoke with recommended prioritizing growth. When growth is the main focus, profitability will fall in line a round or two later. And through the early stages, take every opportunity to extend your runway.
“There are going to be thousands of companies raising in 2024 that bridged through 2023. Most will look the same: low growth, default alive, or lower burn,” Porter said. “The outliers will secure funding much easier. It’s still about execution, but you can’t grow by giving away your product — that era feels over.”
How you know you’re when you’re ready for a VC pitch meeting
You’ve gotten your ducks in a row and are ready to raise money. But how do you know it’s time to set up a pitch meeting? There are a few common indicators VCs told us they consider:
Storytelling: This is paramount to your pitch, and it’s what will make a startup stand out. If your narrative is crisp, compelling, and explains why now, why you, and what’s next, you’re likely to have a better chance of success.
Unique insight: It can be easy to get lost in a big market when you’re a small fish in a big pond. Know the industry better than the rest and have a unique insight toward the problem you’re solving. Prove the problem is big enough and that your team is the right one to solve it.
Clear vision for the future: A good idea is great, but knowing how you’re going to execute it is crucial. Know your long term goals and what the other side of financing will look like before you even get to the pitch meeting.
The sectors investors are watching going into the new year
So what areas are investors excited to write checks for?
At AlleyCorp, Porter is excited about marketplaces, semiconductors, material sciences, developer tools and infrastructure, and cybersecurity in 2024. The firm will also be looking for robotics startups in the new year. He’s also paying close attention to the healthcare sector, with particular interest in digital healthtech around value-based care and care delivery with underserved communities in mind.
Stellation Capital gave us a diverse list of verticals that his firm is making bets on: Crypto, consumer, healthcare, enterprise, climate, psychedelics, and Gen Z sectors.
But what about AI? The adage that all startups are AI startups is a bit overhyped, according to Carta’s Ryan O’Conor. “There will be components of most startups that will find an advantage to leveraging AI in one faculty or another, but they’re not and shouldn’t be AI-led companies,” he said.
Dig deeper
Find the data Carta shared at today’s briefing in their Q3 2023 State of Private Markets report here.
Are you an early-stage founder in New York who could benefit from investor briefings and other events like these? Apply to become a Tech:NYC member here.
