Part 1 - Unlocking 2024: European Investor Emerging Trends

by Robert Taylor

Storms brewing in the cloud, massive layoffs, the AI shake-up, and huge data breaches - 2023 was a challenging year for the tech industry which is still recovering.

With 2024 upon us and January completed, it feels like a New Year bounce has taken place and cautious optimism is in the air, waiting to see what challenges and opportunities await us.

To get the inside scoop, we’ve asked nine prominent investors from across Europe to share their best industry insights, sector predictions and upcoming contenders to watch out for on the horizon of this new year. 

AI- ‘here be dragons’

It’s become the number one question on every investor's mind to venture into AI or to stay on the shoreline?

Aneel Lakhani from Crane Venture Partners tells a cautionary tale:

"Everybody and their mother is sinking money into AI products, but AI products are deflationary and it feels like a race to the bottom right now and it only takes a couple of months for a new AI product to be released that is far superior."

Despite the challenges, he sees excitement in the challenge of identifying what makes a good AI investment and the potential winners that sit behind this. “If you can apply a similar approach to what is being uncovered by AI within drug discovery for example but across wider industries and other applications, that is where you will start to see real returns and that is super exciting.”

Meanwhile, Morgane Zerath from Crane Venture Partners focused more on the allure of potential vertical-oriented SaaS applications for overcoming legacy challenges in traditional industries like healthcare and finance.

“To piggyback off the back of Aneel’s comments around AI, I’m looking forward to understanding those vertical challenges and therefore those applications further, I’m not interested in an AI co-pilot or assistant for example, I want to see how AI can truly be applied to a company where AI is not even operating today and what results it can yield”.

For the promise lies in using AI as a tool to solve longstanding industry-specific problems, rather than joining the never-ending race of AI assistants. 

“At the moment there is lots of talk but we’re yet to see a single company that really disrupts the way we work,” says Ed Keelan from Octopus Ventures. Ed is looking forward to the potential efficiencies AI & LLM can bring to business operations.

He also suggests a resurgence in traditional industries similar to Morgane’s thoughts:

 “I think some of the traditional industries will start to make a resurgence. They’ve been largely ignored and there may be an opportunity for a brave investor. For example, companies will rely on local supply chains in an uncertain geopolitical world, making precision manufacturing ever more important.”

Locked and loaded- Cybersecurity 

Away from the AI space David Klein from One Peak emphasises the stability and resilience of cybersecurity- a sector that isn’t going away any time soon and can weather economic downturns with the best of them. 

“In terms of industries, those that are most resilient is always cybersecurity, threats do not go away,” Klein advises. He also identifies “there is a fundamental trend in the development of the infrastructure stack, particularly in platform-as-a-service and infrastructure-as-a-service plays”

Ken Pentimonti from Paladin Capital gave us a similar take:

Ken sees the cyber security and AI ecosystem as a vibrant area for new investment for Paladin. “AI is driving transformation across all industries, but most AI is tested for functionality – not trust or security and in 2024, we will seek out the innovators who are developing those AI solutions to improve digital security and trust.”  

He highlights the importance of AI solutions- not just function and flash, but the need to provide tools that are secure and trusted by users. Paladin continues to champion 'safety tech,' ensuring safer online experiences.

Two of our other investors suggested that blockchain could be making a comeback as the new “it-kid” of cyber security. 

Emma Hertin from Bring Ventures weighed in: “Aspects of tracking that can increase transparency and utilise data across all parts of the supply chain and logistics.”

Emma sees a lot of potential and excitement in the utilization of blockchain and IoT devices. She also noted increasing demand for enhanced shipping enablement: “We are seeing increasing demand from consumers for greater enablement when it comes to shipping goods, particularly with the C2C platform which is driven by the trends in second-hand markets and the circular economy.”

Alston Zecha from Eight Roads shares similar sentiments: “The blockchain space is coming back and the incoming regulations will trigger a real shift in growth”. Additionally, he points to a growing fascination with digital assets, anticipating a resurgence in the blockchain space. 

The future’s looking… green? 

“The changes to the energy grid and the traditional players moving slowly means we are seeing a major shift,” said Jacob Key from Luminar Ventures, who is finding a lot of excitement and interest in electrification, renewable energy, and sustainability-driven companies.

On a personal level, “I have a big interest in gaming, music as well as aspects of FinTech and DevOp tools.”

Other investors like Martin Rajcan from KAYA VC were excited about the mission-driven founders focused on revolutionising not only the energy transition but also healthcare digitisation.  

“The goal of making our planet and its people healthier will be increasingly attracting to top founding teams” He anticipates rising stars in next-gen consumer experiences, “Think about tools and products at the intersection of content creation, virtual reality, and social gaming. A quiet revolution in entertainment.”

And of course, any discussion on the future of tech would be remiss without mentioning climate tech.

Alston Zecha from Eight Roads predicted this growing sector will be met with more scrutiny in the future:

“The bar is certainly going to be raised when evaluating companies in the carbon accounting space for example or those focused on decarbonisation”. 

In conclusion, whilst 2024 may be a recovery year, there are lots of exciting opportunities across the tech sector with key takeaways being:

  • Resilient sectors like cybersecurity and infrastructure should never be discounted as an investment focal point
  • Be on the lookout for AI oversaturation and be mindful of the deflationary nature of AI products
  • Climate tech will continue to boom and the sustainability sector will continue to draw attention
  • Investors expect traditional industries to experience a revival in 2024- don’t get left behind!