What Was Discussed at the 2024 Venture Capital Outlook: Key Takeaways and Photos
On Tuesday Feb 14th we hosted our inaugural venture capital outlook 2024 in Del Mar.
On Tuesday evening last week, more than 60 tech founders and venture capitalists came together to attend the VC Outlook 2024 event in Del Mar sponsored by Gunderson Dettmer and Deloitte.
CEOs were in fundraising mode, building in stealth, and others plotting their next move. We also had about 20 investors working the room. The mood was celebratory despite the venture slowdown, and when San Diego startup deals are at an 5-year low.
Everyone in attendance had a similar question top-of-mind: “How will 2024 play out?”
We were thrilled to have Ankona and Interlock Capital who closed new venture funds last year. Industry Ventures, which raised $1.7B last year also joined us on the panel.
In a 30-minute panel conversation, we covered why investors are bullish on the San Diego startup ecosystem, the types of conversations they're having with their LPs, and which early-stage businesses have the better odds at raising capital this year.
Note From This Week’s Newsletter Sponsor:
The LA Fund is a regional venture capital firm that specializes in investments originating from Los Angeles, a thriving hub of media and technology.
The LA Fund is a $10M LA-focused fund with investments into a variety of promising start-ups that are profitable and are sourced from Early Stage LA, Venture Society at UCLA Law, and the Economic Club of Los Angeles (an institutional investor dinner series in Westwood).
Connect with Robert Mowry, General Partner at LA Fund to learn more.
Perspective on San Diego’s Flywheel
I asked investors for their take on San Diego.
Brian Langner, Industry Ventures
The tech scene is a lot bigger than I expected.
I decided to move to San Diego with my wife from the Bay Area after multiple road trips to Southern California going all the way back to 2017 when Mike Krenn was organizing the annual Venture Capital summits at Connect.
Overall the tech community has grown tremendously over the past eight years.
Al Bsharah, Interlock Capital
We’re now starting to see the flywheel effect of more fast-growing startups that mint millionaires — who then go on to start their next business venture or invest into cool ideas. Seismic was one of the first ones and now there are many others.
We’re also starting to see more and more repeat founders. That’s what I’m most excited about for San Diego’s ecosystem in the next 5 years.
Brian Mesic, Ankona Capital
I’ve been living in the San Diego area for more than a decade-plus, and I can confidently say San Diego has Los Angeles beat in many ways.
I remember talking to Eric Otterson two decades ago about how we can make San Diego what it is today?
I think we’ve done an okay job so far at accomplishing that.
San Diego is still sleepier than I would like. But the flywheel effect is happening.
LP Conversations
I asked panelists to share the conversations they are having with their LPs.
Brian Langner, Industry Ventures
Investors are saying show me the money.
Distributions are the lowest that they’ve been in fourteen years. Everyone is sitting on a ton of paper gains and questioning what they are really worth, compared to when they raised at 2021 valuations.
LPs are asking: what are you doing in AI? Almost daily.
Al Bsharah, Interlock Capital
Our conversations today have shifted more towards relationship building.
When we were actively raised, the story we pitched LPs early on was that: historically some of the greatest companies have come out of these downturns and recessions. We also pointed out that emerging managers tend to outperform.
Despite appetite drying up across the board, LPs invested because of our ability to source top deals and generate outside returns.
Brian Mesic, Ankona Capital
Our focus is on bringing capital back into the pockets of our investors. There's enormous pressure to produce liquidity, and if we don’t we will be out of business.
You know, there’s still a remarkable amount of money out there.
Startups — that are capital efficient with low burn rates — are getting multiple term sheets in a few weeks from investors. It’s not all doom and gloom.
Placing Bets in 2024
I asked what types of companies are you all looking to invest in this year?
Brian Langner, Industry Ventures
Answer: Software, fintech infrastructure, digital health, and healthcare IT.
We're spending all our time with companies solving real problems for their customers. Customers who truly care about the solutions that are being delivered. We want to ensure we can build enduring value over time.
Al Bsharah, Interlock Capital
Answer: We invest in all kinds of different businesses.
Our model is to surround ourselves with our network, which is founders, operators, executives, really smart people to help us due diligence, because of that, we're not afraid of any particular industry.
We’re interested in AI to some degree, but if you're out there building a business that can be coded or replicated over the weekend, that's not super exciting, and there are a ton of companies out there who fit in that category.
Brian Mesic, Ankona Capital
Answer: Early growth-stage B2B software companies.
AI is infecting everything — there's no pitch that doesn't have an AI element. We don't invest in things that we don't understand, including crypto. The deals that we did last year were ones that got on a capital efficient path early.
We have personally invested in 12 companies out of our fund, with about five based in San Diego. We hope we can keep it that way going forward.
Delicious food, plenty of insightful conversations, and breathtaking views of San Diego! What an incredible event!