2024 predictions, best books of the year, demographics and bank risk, SAFEs

What’s in store for us in 2024?

As we transition to a new year, it is always fun to read venture capital predictions (and in the case of this Techcrunch article include a few of my own).

A few takeaways:

?? What comes up may come down: If you're in AI or defense, 2023 was your year. But every hot segment has its ups and inevitable downs. A number of investors believe the hype will come down in 2024.

?? Valuation Variances Converge: Different sectors faced varied valuations. Climate tech had premiums, while other areas might face adjustments. These should converge over time.

?? Stages had different outcomes. This should normalize. As I shared, "the growth stage remained quiet in 2023, with many structured and/or internal rounds that punted valuation downgrades to the future with more structured terms (e.g. liquidation preferences). I suspect the rubber will hit the road in 2024 and some of these will get adjusted."

?? Role of VCs: In tough times like this, VCs can show they are more than just funding to support startups through these dynamic times. What do you think will happen in 2024? What is consensus that should not be?

Interesting Discussions

I’ve long written about cross-pollination of ideas in tech. This phenomenon happens everywhere. Growing up as a French Canadian in an anglophone region of the country, but frequently visiting my family in Europe, I loved seeing the linguistic differences between the two regions, notably some of the unique words created. I was amazed (though not surprised) to learn that the largest French population in the world was not in Europe or Canada, but French Africa, representing over 60% of French speakers, (and the largest francophone city is Kinshasa not Paris). And there, a boiling pot of innovation is taking place, and coming back to influence everywhere.

What do demographics have to do with bank risk? My gut would have been that as societies age, and customer bases become wealthier (and richer) the banking system becomes more conservative. Turns out I was wrong. “Banks with higher exposure to aging counties increase loan-to-income ratios. Laxer lending standards lead to higher nonperforming loans during downturns, suggesting higher credit risk.”

What is the role of investment stewardship in corporate governance? Interesting piece challenging the traditional focus on shareholder primacy and advocating for equitable value distribution among all stakeholders, including workers and communities. The piece highlights the impact of shareholder activism in addressing global challenges like the climate crisis, as seen in Exxon's board restructuring, and underscores the importance of collaborative approaches between investors, employees, and communities for more effective corporate decisions.

Are SAFE’s the right answer? They surely are easier, avoid negotiations and are faster. But there are tradeoffs. Good piece that dives into a few of these.

How is fintech evolving in the Middle East and Africa? We are still quite early but great long-form report highlighting the rapid advances. There are also a number of emerging unicorns with potential exits in the coming years which may help propel certain regions up and to the right in this curve.

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