“The species that survive are not the strongest, but those that adapt best to change.” Whether or not this quote can truly be attributed to the renowned Charles Darwin, one thing is certain: its principle extends beyond the animal ecosystem, for example, to the entrepreneurial ecosystem and the species that inhabit it: entrepreneurs, startups, etc.
Therefore, staying alert and informed about the macroeconomic context, though it may seem like a deviation from focus, actually provides more data for making business decisions with better information.
At Startup Valencia, we have compiled some of the trends and predictions that will mark 2024 for startups, according to prestigious investment funds and specialized media. Here are the 5 innovation and entrepreneurship trends that every startup should consider for 2024:
Gradual Recovery of Investment
“We would say the worst is behind us,” wrote venture capital company Atomico in its ‘State of European Tech 2023‘ report, which we recently echoed in a post by Startup Valencia on a local and national level.
Indeed, only in January, Valencian startups have closed investments of more than 20 million euros, mainly thanks to Bit2Me (14 million), Internxt (3 million), or Depasify (2 million). To put the figures in context, 30 million euros were raised in the first half of 2023.
With a horizon of more favorable interest rates, investment activity is positioning itself again. However, with the lesson learned, the focus is on quality over quantity. Or in other words, on results and not expectations.
It is foreseeable that funding rounds will fall on scale-ups that already have proven market fit, meaning startups will be subjected to more selective fundraising processes in which they must demonstrate much more than a product or a vision: their path to viability.
For the Valencian startup ecosystem, this represents a fantastic opportunity for all the companies created in the last few years that have survived in an unfavorable investment context. With more limited resources, ingenuity sharpens, and every euro allocated to product, team, or marketing must justify its return. A learning that now plays in their favor in negotiations with investors.
Artificial Intelligence Everywhere
If one looks at the rankings of the world’s largest companies before and after the arrival of the Internet, one will understand the revolution and challenge it has posed for companies of all sizes.
Successfully surfing that first wave of digital transformation has marked the future of thousands of companies worldwide, large, medium, and small.
And Artificial Intelligence is one of those transformative powers with the ability to make global differences among those early adopters who successfully incorporate it into their production processes and those who do not want (or know how) to see its potential.
The prestigious consultancy Gartner estimates that 80% of companies will have implemented Artificial Intelligence solutions by 2026, significantly multiplying the 5% of companies ‘dipping their toes’ into AI in 2023.
Without a doubt, Artificial Intelligence will change the rules of the game at all levels and in all sectors. Startups should not make the mistake of thinking of it as ‘a new fad’ or complex deep tech. It is advisable to educate and inform themselves about its potential, identify productive processes that AI can enrich, and adopt a trial and error approach.
For a more detailed analysis, we recommend visiting our report ‘10 Predictions About Artificial Intelligence for 2024‘ or ‘The Impact of AI on the Valencian Startup Ecosystem‘.
Talent Migration to Attractive Places to Live and Start a Business
The trend of remote work and decentralization that began during the COVID-19 health crisis continues and is on the rise in the startup world, where many companies competing fiercely for technical talent know that work flexibility is a highly valued asset.
This greatly benefits cities that, like Valencia, have managed to promote their international image to be recognized as the best city in the world to live, becoming a destination for incoming innovative talent.
Knowing how to integrate these individuals into the local network is key to multiplying the value of their international knowledge and contacts.
Intense M&A Activity
Years of restricted investment activity have put many startups against the ropes, especially those with inefficient or unproven business models, but not necessarily bad products or teams. The big fish have smelled blood, and large companies are scouring the market for startups to sink their teeth into.
The goal is to seek win-win situations where startups receive financial stability and access to corporate resources, while the latter ensures acquiring innovative solutions and buying time for experienced teams to execute their mission.
Source: 2024 VC Trends to Watch
The Sustainability Boom on the Horizon
The scientific community has been warning about the deterioration of the planet for decades. Legislators lack the determination to agree on bold policies to tackle the problem of climate change. And capital, which ultimately moves the world, has never seen business in this matter… until now?
At the recently held World Economic Forum, six of the top ten concerns over the next ten years are environmental problems:
If economic power views Sustainability as a significant market from which to obtain juicy returns, startups operating in this sector will be the main beneficiaries…along with the rest of society.
Other Considerations
In addition to the mentioned trends, there are also a number of other factors or visions expressed by these same sources that are worthy of mention:
- SaaS Golden Era. Software-based services will experience a second golden age thanks to AI, which will improve their products and allow them to bring more value to their existing customer base. Particularly, SaaS focused on Sales will take the spotlight.
- Boom of No-Code Entrepreneurs. Starting a project has never been so easy. With the current set of no-code tools, launching an MVP to validate a business idea can be a matter of hours without the need to take a leap into the unknown. It perfectly allows balancing a main activity with a side hustle until it surpasses the problem/solution stages, first customer, etc.
- Macroeconomic Volatility. It is taken for granted that as the year progresses, interest rates will fall, gradually boosting investment activity and consumption. However, any unexpected turn of events (elections in the United States; Red Sea crisis; wars in Ukraine and Israel…) can change the landscape. If so, once again, those who best adapt to the new scenario will survive.
Without a doubt, these 5 trends and predictions will mark 2024 in the startup ecosystem. As the year progresses, we will see what unfolds on the horizon for 2025.
