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VC firms to keep focus on fundamentals but eye early-stage deals in 2024
Financiers agree 2024 will be about managing risks by prioritizing strong fundamentals, but while some investors expect a year of squeeze, others are looking beyond immediate financial returns.
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A person uses a virtual dashboard for digital marketing and investment in this stock illustration. (Shutterstock/Natee K. Jindakum)
L
ast year presented brutal challenges for start-ups and the venture capital firms backing them as rising interest rates prolonged the so-called tech winter, but while some investors expect 2024 to be a year of squeeze, others are looking beyond immediate financial returns.
Rather than an outright shift toward risk-on sentiment, industry insiders expect this year to be marked by investors managing risks by coupling early-stage and emerging market investments with a focus on fundamental analysis.
Southeast Asia’s private funding hit a six-year low amid high capital costs and increased pressure to shift to a profitability pathway, among other factors, according to the e-Conomy SEA 2023 report published by Google, Temasek and Bain & Company in November.
In the case of Indonesia, funding in the country nosedived across all stages by 87 percent year-on-year (yoy) to about US$0.4 billion in the first half of the year.
The “2023 investment landscape is not as exuberant as 2021-2022, but it has provided some of us with new experiences, especially for those who have not experienced the up and down cycle,” Indonesia’s East Ventures managing partner Roderick Purwana told The Jakarta Post on Dec. 24, describing it as a year of “normalization” for the tech investment cycle.
Singapore’s Insignia Ventures CEO and founding managing partner Tan Yinglan described 2023 as a “learning curve” for regional start-up investments, prompting adjustment in fundraising expectations, valuations, corporate maturity and profitability for both investors and founders.
Challenges also included squeezed margins, an increased customer churn rate, geopolitical tensions rattling supply chains and the artificial intelligence (AI) “arms race”, Tan told the Post on Dec. 21, 2023.
