Apr 1, 2024 - Business

Survey: VC optimism returns for 2024

Illustration of a dollar bill as a briefcase, but the value says "TBD."

Illustration: Maura Losch/Axios

After pulling back in 2023, venture capitalists (especially established fund managers) expect to dial up their capital deployment this year, according to a new survey.

Why it matters: The uncertainty of the last two years has led to a notable slowdown in investment activity.

By the numbers: According to a recent survey by the Kauffman Fellows program, 53% of the survey's respondents said they expect to deploy more capital this year than they did in 2023; only 6% expecting to invest less.

  • The sentiment was a bit stronger among Silicon Valley investors (compared to those elsewhere), and among established managers (compared to emerging managers).
  • The majority of VCs said they invested less in 2023 than in 2022, with investors in Silicon Valley and established managers especially pulling back last year, per the survey.

The big picture: For entrepreneurs who put off fundraising last year, this year should offer a bit of respite, Kauffman Fellows CEO Fernando Fabre tells Axios.

Zooming in: Established managers are also slightly more confident (52%) than emerging ones (49%) about raising new funds in 2024, the data shows. The latter group are a little more concerned (22%) than established VCs (18%).

  • However, investors outside of Silicon Valley are a bit more confident than their Bay Area counterparts.
  • VCs also expect that institutional investors ( pensions, insurance companies, etc.), endowments, foundations and, to a lesser degree, family offices will invest less in venture funds this year; meanwhile, sovereign wealth funds will invest more.
  • "I would expect that emerging managers will knock on every door of family offices, while established managers will be going to sovereign wealth funds," predicts Fabre.

The bottom line: By and large, VCs expect exits to remain challenging this year, with an increased focus on mergers to make up for the weakness of IPOs, as well as secondaries.

Methodology: Kauffman Fellows received responses from 262 of its network, with 66% based in the U.S. and 54% being emerging managers.

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