2. Venture capital will be difficult but not impossible to find

I was at AWS re:Invent in late November. It was my first time at re:Invent, but one of my colleagues observed that the balance of small to large booths at the expo had shifted noticeably from past years. Established players like Datadog, HashiCorp, and MongoDB had their glitzy encampments, but the vast majority of exhibitors were in small booths or even smaller kiosks. Growth stage companies who might’ve splurged for a flashy presence as an arrival moment in years past were instead mostly on the fringes of the show floor (if they had a booth at all).

This hints at a tough dynamic that will dominate the tech landscape in 2024: new investment will continue to be very difficult for established companies to find. Venture capital (VC) funds do have capital to deploy, but those investments are going to companies that have found profitability and growth through strong product-market fit and efficient operations. 

Even when companies meet profitable and growing criteria, many new rounds of financing are “down rounds,” meaning they come with significantly reduced company valuations to correct for the inflated valuations driven by nearly free money in the zero-interest rate years. In the year to come, we’re likely to see lots of down rounds, many acquisitions, and an unfortunate number of companies unable to find any path forward at all, all driven by scarcity of new capital for existing businesses.

The slightly better news is that VC funds do have capital, and while requirements are tougher than in the past few years, founders are having some luck raising early rounds of investment. As companies fail, new ones will spring up in their wake. 

Other indicators of growth appear in the form of some big tech companies who look to be resuming mass hiring as continued demand growth for their products makes it clear that they overcorrected on headcount. So, while 2024 promises to be tough in many ways, I’m hopeful that we’ll see some positives emerge to help balance things out.

4. And AI continues to top the charts

It would be impossible to ignore the impact that AI has had over the last year on technology, society, and the roadmaps of all companies, big and small.

The largest technology companies are observing an AI arms race, ranging from the rapid development of new models and algorithms, to the acquisition of AI start-ups, to the hiring of the best AI talent at a significant premium. In addition to developing new products to attract people to their ecosystems, a proliferation of tools for engineers to build AI-powered products is ensuring AI features populate everyone’s roadmaps, from the smallest start-ups to the largest enterprises. The floor is rising on what consumers expect in predictive and generative text, image and video recognition and generation, and automations that get their work done faster.

Therefore, the trend for 2024 is more of the above, with an industry accelerating toward AI. But for the 99% of the industry that is not working for the big five, the question is how to ride various lines; lines that divide hype and reality, usefulness and fads, and also doing all of the above whilst keeping costs under control. You don’t want your entire round of seed funding to be spent on GPT-4 calls.

This is why it’s important to remember that underneath any trend or prediction, by me, or anyone else for that matter, is that you fundamentally should obsess over what your customers want and deliver that to them. If that involves using AI, then great. If it doesn’t, then that’s fine too. Obsess over your customers’ needs, not the technology. That’s how you stick around for the long term.