It’s never an easy feat to predict the economic trends and storylines for a new year. While most people in technology picked up on the growing interest in AI as we headed into 2023, it’s a bit more difficult to predict the banking collapses that took place within a few weeks of each other last year.
But, to try and make sense of the biggest trends impacting Boston startups in 2024, we talked to some of Boston’s venture capitalists, who closely watch the trends in tech, funding, hiring and more all year.
This year, BostInno solicited input from Mark Tomasovic, Boston-based principal at Energize Capital; Daniel Acheampong, general partner at Visible Hands; Rudina Seseri, founder and managing partner at Glasswing Ventures; and Ann DeWitt and Michael Kearney, general partners at Engine Ventures, about the trends they’re watching for 2024.
How will AI innovations shape startups in 2024?
Tomasovic: Many climate-tech companies serve customers in industries with a high expectation of data privacy — for example, finance and critical infrastructure — and proper data governance is a prominent concern even outside of climate. For this reason, I believe we’ll continue to see startups experimenting with AI to automate tasks that don’t put sensitive customer data at risk.
Acheampong: The expected influx of AI companies will surpass the numbers we observed in 2023, leading to a surge of innovation. However, there will be lots of AI noise and low-quality companies. Discernment will be key. For startups, it is important to understand that there is no MOAT as the technology is open source. Anyone can use the same API to build what the startup is building and incorporate more data and distribution.
Seseri: In a short time, the term “AI startup” will be as redundant as the term “internet startup” is today; every startup will be an AI startup. With 2023 likely being the peak of the AI hype, 2024 will likely bring a trough of disillusionment, a period in which those who have invested in undifferentiated technology will realize lackluster gains. Nevertheless, as companies experience the real value creation of AI, adoption in the enterprise will continue to grow.
DeWitt: Effectively all new companies in tough tech will have AI approaches built into their teams and plans; this will continue to pull tough tech companies that have traditionally been outside the time window & comfort zone of many VCs to come into the window.
What other industries do you expect to get a lot of attention in 2024?
Tomasovic: With the rise of AI and massive new data center energy needs, I believe software to manage energy consumption is poised to emerge as a huge investment opportunity. The demand for electric power is currently outpacing the grid’s ability to supply it, and Energize is particularly excited by the momentum behind new software tools to help make energy consumption and management — from EVs to the power grid — much more efficient and scalable.
What will the M&A landscape look like next year?
Acheampong: The M&A landscape is anticipated to improve fueled by potential decreasing cost of capital and a backlog of large private companies ripe for M&A activities.
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Will we see any changes in the early-stage funding environment?
Kearney: The venture landscape over the last 24 months has been an unfortunate self-inflicted wound. Fear and uncertainty associated with high interest rates and geopolitical risks drove decision making and a broad pullback. But, the fundamentals of the US economy are robust with interest rates approaching a soft landing, growth and job creation remaining high, and massive tailwinds behind new tough tech industries. Companies that execute to their plans and hit their milestones without slowing down are going to be well positioned for long term success.
Tomasovic: The climate tech ecosystem is reaching a new stage of maturity, and with that comes a new focus on growth funding vs. investment in the early stage. That said, there is still a huge need for new technologies to accelerate the energy transition, especially in sectors such as hydrogen and nuclear, and investments in these areas will be important for innovation
What local companies are poised to have a big 2024?
Acheampong: Stackwell Capital
Seseri: Labviva, Reprise and Black Kite
DeWitt: Cellino Bio
Kearney: VEIR
