January 31, 2024 | Investment Themes

2024: What We See Coming

Costanoa Team

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Costanoa Team

We often get asked for our perspective on broader industry trends. So to finish out January, we thought we’d do a highlights reel across all our domains. 

Here’s what we see in 2024…

AI Bubble Deflation – We’ve said it before: there is a before time and after time. AI isn’t magic. It’s an enabler. But it is also now table stakes for how new companies make their products better. It doesn’t mean every startup is an AI startup, but we expect to see GenAI enabling products to do things that weren’t possible before. There is a collective AI reality check. We love this graph from Scott Galloway showing the AI mentions in S&P 500 earnings calls dropping from 35% to 29%. This reality check is also showing up in early stage company valuations.

Securing GenAI – Hackers leveraging generative AI are already launching hyper personalized attacks at scale. But GenAI is an equal opportunity tool for the good guys. It enables smarter sifting through the increasing volumes of security alerts, helping triage and respond to attacks. The bad guys have new weapons–and the good guys need to use them to keep up. 2024 will be the year enterprises fully wake up this new reality and seek more dynamic, contextual, and smarter security solutions. 

Tech Transforming the Traditional – Robots and self-driving cars? Nope. Look for more meaningful innovation in manufacturing, automotive, insurance, accounting, janitorial, defense–traditional industries where tech must be purpose built and radically useful. Some of us call this sexy AI-enabled SaaS for unsexy businesses, but it’s about new ways of working, new ways of payment, new types of financial or insurance services and the enormous businesses that can be built as these traditional businesses modernize with new waves of technology.

Eager to Exit – It’s a brutal market truth; sometimes a bigger company that already has the market reach can manifest a startup’s vision faster. Look for more M&A activity as startups seek a ‘better-together’ story. Although IPOs were practically non-existent last year, with the S&P at record highs, there is plenty of hype around Reddit, Stripe and others opening that door back up. But, it’s an election year, and that can always lead to a few unexpected twists and turns.

More Women in Tech –  We’re optimists, so we’re just going to put it out there. Women-led tech companies are reported to perform three times better than male-led companies, yet women hold fewer than 27% of technology jobs with even fewer women working as CTOs or heads of engineering. It’s even more stark when it comes to female founders: only 2.3% of venture capital goes to all-female founding teams and 10.4% for mixed-gender founding teams. We’re putting the numbers out there to keep ourselves accountable. We can all do better. (Check out our Women Builders Slack channel community if you want to join the conversation.)

We won’t pull any punches; the second half of 2023 was one of the hardest we’ve seen for many companies in our portfolio, especially for companies at more scale. But despite some market headwinds, early-stage startups still broke out and inspired, like Mindtrip, a GenAI travel agent led by 12 seasoned co-founders, Delphina, a copilot for data science founded by ex-Uber machine learning engineers, and Comun, a neobank breaking the mold on fintech to serve the Latino immigrant community in the US. 

And for Costanoa, we saw Amy Cheetham earn a spot on the Forbes Midas Brink List, and Tony Liu make Business Insider’s list of rising stars in venture capital. So on balance, life is good. We love being in this business and the work it lets us do. 

If any of this intersects with your interests or an early-stage founder you know who is building, we’d love to hear from them.


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