Part 3- Unlocking 2024: What are the primary discussions investors are having with founders in 2024?

by Robert Taylor

For Part 3 of our Unlocking 2024 investor interview series, we focused on what were the primary discussions that investors were having with Founders right now and what were the primary questions being asked regarding the year ahead.

As we step into the dynamic landscape of 2024, the dialogue between investors and founders serves as a compass, guiding the trajectory of entrepreneurial endeavours amidst evolving market conditions and emerging trends. In the third instalment of our Unlocking 2024 investor series, we delve into the primary discussions animating these pivotal conversations, shedding light on the pressing concerns, strategic imperatives, and shared aspirations shaping the entrepreneurial ecosystem across Europe.

 Balancing Growth and Efficiency

Martin Rajcan at Kaya VC primarily discussed both sales-led growth and capital efficiency across the Kaya portfolio.

“On the one hand, we are helping several companies transition from founder-led, product-led, and inbound-reactionary sales motions into a repeatable, outbound sales motion, on the other hand, we’re discussing how to invest in people and products with as clear as possible, near-term ROI. It’s about balancing growth and efficiency, generally with higher intensity and granularity than might have been the case in the heady days of a couple of years ago.”

David Klein at One Peak suggested there were 3 key topics that Founders are asking right now, centred around hiring, AI implementation, and growth strategies for 2024.

“We have made a lot of interesting C-Suite and VP level hires over 2023, a lot of the unicorns have deteriorated quite a bit and people are realising it's probably not the play to build a significant personal wealth, and therefore moving to a smaller scale up probably makes more sense.”

“The second piece is how do I implement AI in my product, and also in my internal processes, how can we utilise people more effectively and instead of scaling rapidly, how can we automate some of our processes with AI and be more efficient.”

Fundraising Strategy and Market Positioning

Morgane Zerath at Crane Venture Partners has spent a lot of time with Founders asking around when they should look to raise as well as discussing their sales and marketing approach.

“The Founders are thinking hard about the quantum, how much do they need to raise? Because they don’t know what is coming. Some of them are thinking about raising to give themselves a 12-month runway, it’s not enough in this market, you need to be looking at least 12-18 months.”

“Some of our Founders are also getting a bit lost around what do VCs want. VCs are asking for metrics that companies at pre-seed don’t have and are some VCs maybe pushing that a bit too far?”

“We back a lot of technical founders and we need to reiterate that they have to operate with a problem first approach, sometimes they can get carried away talking about the tech or the product. They need to have a problem-first-mentality and demonstrate they can drive the sales and marketing side of things as a Founder and focus on their positioning & messaging.”

Aneel Lakhani at Crane Venture Partners mirrored a lot of Morgane’s sentiments and suggested the big discussion with all Founders centred around the runway.

“All my conversations right now are around how much money you have left, how much money should you have, and how aggressive or conservative should you be with your cash?”

“I’m also speaking with Founders around their future funding and while they should be seeking a larger cushion, they need to work on their story around how to achieve growth and demonstrate how it will not be infinitely expensive.”

For Jacob Key at Luminar Ventures, the primary discussions with Founders are centred around the current investment conditions.

“Everybody is asking about the current financing climate and when it will be a good time to raise, the reality is that things haven’t changed too much versus last year, it’s not easy to raise money at all. As a result, we are ensuring Founders are focused on their unit economics and how we drive greater profitability.”

Alston Zecha at Eight Roads followed a similar theme to Jacob.

“The conversations with Founders are more economy-orientated right now, when can I move out of survival mode and start thinking about aggressive growth and taking market share again? For companies that didn’t close any rounds, 2024 feels like the year of figuring out what fundraising looks like for them so that’s been a big topic on when would be a good time to raise.”

Ken Pentimonti at Paladin Capital has also been leading discussions with his portfolio founders around the investment environment.

“Top of nearly all founders’ minds is the availability of VC funding. It has undoubtedly been a challenging period for many start-ups that have for the first time experienced a tougher fundraising market. However, the cyber security sector is in a strong position as the need for protection against cyber criminality, human error and negative psychological impacts is growing exponentially with no let-up in the demand for solutions.”

Adaptability and Resilience

Emma Hertin at Bring Ventures has been having discussions around ensuring Founders are building solutions that are truly providing value as well as continuing the capital efficiency narrative.

“We are ensuring Founders remain focused on showcasing their technology solutions that are solving real-world problems, this is what is going to attract continued investor as well as corporate support”

“A focus on cost-cutting has also been important but Founders need to have a balance, how to reduce expenses but also when there is an opportunity to push, you can push hard straight away”

Ed Keelan at Octopus Ventures suggested a lot of conversations with Founders continue around the macro environment.

“The primary discussion is when we think the macro environment will turn the corner! The truth is no one knows, but there’s a need for prudence and ensuring careful management of cash and cost control. With various elections taking place this has the potential for further instability.”

“Founders are keen to understand our investment horizons and this is where being a long-term, evergreen investor is really useful, we are not in this for the short-term.”

Conclusion: Navigating Uncertainty with Clarity and Conviction

In navigating the uncharted waters of 2024, investors and founders alike are engaged in a dialogue of unprecedented depth and complexity, confronting multifaceted challenges with clarity, conviction, and resilience. The convergence of strategic imperatives—from sales-led growth to AI implementation, fundraising strategy to market positioning—underscores the adaptive prowess and visionary leadership inherent within the entrepreneurial fabric of Europe. As uncertainty looms large on the horizon, these dialogues serve as beacons of hope, illuminating pathways towards sustainable growth, enduring partnerships, and transformative impact. Together, investors and founders embark on a shared journey towards unlocking the boundless potential of the entrepreneurial spirit, transcending obstacles with ingenuity, tenacity, and unwavering resolve.