Six predictions for the future of health, wealth, and work in 2024

As I have been reflecting on the ups and downs of 2023 - a Silicon Valley banking crisis, global military conflicts, rapid evolution in AI technology, a miraculously resilient public market thanks to big tech - there is no doubt in my mind that 2024 is going to be just as exciting. Although it is impossible to predict what twists and turns may be ahead of us, I have attempted to distill hundreds of data points from our ecosystem into six key predictions that are likely to shape our investments as a firm. To arrive at these six predictions, I spent time with key stakeholders in the workforce, healthcare and financial ecosystems, I observed our 60 portfolio companies, and I listened to pitches from a broader pipeline of hundreds of potential investments. Given it’s already February, I admit I’ve had the benefit of being one month late to hone my hypotheses, but I am still okay with being wrong! Here's what we are expecting at SemperVirens in 2024:

Six Predictions:

1. AI’s primary impact in 2024 will be accelerating a shift to skills-based organizations.

Big changes are coming, but for now, HR leaders remain cautious about implementing generative AI at scale due to ethical and privacy concerns. Short term implementation will focus on operational use cases such as performance management reviews, meeting preparation and summary, contract reviews, etc. However, most of these use cases will be adequately solved by incumbent platforms like Google and Microsoft that are already embedded in employee workflow, leaving little room for startups to scale. However, conversations about the looming impact of this powerful new technology will dramatically accelerate company-wide commitments to becoming truly skills-based organizations. Efforts to capture employee skills at scale will lay the necessary groundwork for the massive shifts in talent that will inevitably occur once ethical and privacy concerns are answered.

2. Winners in healthcare will be virtual-first, insurance-covered solutions with multi-channel distribution strategies.?

With benefits costs increasing and the labor market loosening, employers are actively cutting back on COVID-era wellness offerings, rolling back wellbeing initiatives, reducing flexibility, and cutting vendors that have not demonstrated a clear ROI. Mental health and women’s health have risen to the top of the priority list for employers and payers, firmly establishing themselves as necessary categories of spend with proven ROI, but other potential new categories have lost mindshare.? We will see consolidation in virtual care solutions as customers look to get more from their existing vendor relationships and the market digests the elevated growth-stage valuations from ‘21 and ‘22. In order to rise above the noise, new innovations will need to be lower-cost, effective, and not overly dependent on one distribution channel.?

3. DEI efforts will be swallowed by general hiring, culture, and retention initiatives, eliminating the appetite for dedicated solutions and forcing existing tools to add equity metrics to their offerings.?

The legal challenges to diversity, equity and inclusion and environment sustainability goals have caused employers to back away from concrete goals and diversity targets. This will be a challenging new chapter for DEI-specific solutions, as many existing platforms have integrated population-specific analytics into their offerings. CHROs are instead reframing these initiatives to focus on “equity” as opposed to inclusion, belonging, and other harder-to-measure metrics. The good news is this will force existing tools and platforms to include equity metrics into their existing offerings, and push leaders to integrate diversity into overall strategy and culture.??The companies that do this successfully will outperform.

4. There will be a rise in vertically focused upskilling/reskilling solutions as industries adapt to sustained labor shortages.?

Especially in industries like healthcare and skilled trades, a lack of qualified professionals, strict licensing requirements, and an aging workforce are creating significant barriers to critical goods and services in our economy. Vendors are adapting by providing industry-specific learning and development offerings, and most existing businesses will need to work with a specialized provider or develop their their own train-to-hire or internal reskilling/upskilling solutions. For the first time, AI can enable significantly more personalized and cost effective delivery of training content, yielding exciting opportunities for new vertically focused solutions.

5. The proliferation of embedded fintech solutions will empower existing vertical vendors to offer highly customized financial services for increasingly specific segments of the workforce.?

Whether someone has crushing student loans, a need for immediate access to their wages, or unique short-term insurance requirements, existing generic financial services are falling short. Even with a wave of new consumer finance solutions, most are still built upon the traditional employer/employee relationship, which is undeniably shifting. The recent rise of APIs connecting payment, payroll, benefits, and workflow software are allowing end users to demand financial services that meet their unique needs. As the employer/employee relationship continues to evolve, the infrastructure now exists to allow money to flow more flexibly as well, setting the stage for better financial wellness across the board.?

6. As exits remain muted and the revenue multiples revert to historic means, the early growth stage represents an attractive risk/reward for investors in healthcare, workforce, and fintech.

It’s no secret that early-stage valuations haven’t moved much during the downturn, but growth valuations have undergone a significant correction that is very much still underway. Companies with healthy unit economics and strong growth metrics will still command a premium, but 2024 will be an exciting time for disciplined investors to gain access to very high quality businesses that are being fairly valued once again.?

In conclusion...

If you are investing or building in one of these areas, or you agree or disagree with what I have concluded and would like to share your reasoning, I’d love to hear from you!

Thank you to the following people for their valuable input on these predictions: Colin Tobias , Caribou Honig , Michael Keane , Derek Sidebottom , Mike Clementi , Jon Tait , Carolyn Frey , Alejandro Reyes , David Landman, Ph.D. , Shelby Wolpa , Jeff Ryan , Joe Militello , Angela Cheng-Cimini 鄭婷婷 , Ian OKeefe , Diane Gherson , Jeremy Shapiro , RJ Milnor , Sumona De Graaf , Monica Pool Knox , Stela Lupushor , Amee Parekh , Amit Mohindra , Dean Carter , Janet Clardy , Mike Vishny , Marcus Sawyerr , Hayagreeva Rao .