Good morning there,

Earlier this week, I met a VC for coffee in an attempt to restart my brain into work mode after a nice holiday break. They told me that they were currently hustling to send out a term sheet and get a deal done — even during these slow first few days of the year. Despite that, the investor agreed with me that we likely won't see a return to "normal" in 2024.

It's something I'm thinking about a lot right now. While 2023 was clearly a tough year for the industry, I don't believe enough time will have passed by this time next year for all of the components that started to unwind from the frenzied days of 2021 — like the crazy valuations or the lack of capital returned to LPs (and the implications for future fundraising) — to fully work themselves through the system.

That said, it won't be all doom and gloom. Deals are still getting done, and there are several hot sectors to keep an eye on this year — AI will undoubtedly still be one of them. But what else do VCs think you should keep an eye on? That's what we dig into today. Scroll on for their predictions. 

Elsewhere, we look at what to watch in climate tech this year, how to get a job in VC and why AI could be the big new thing in your love life.

—Anne Sraders, senior reporter

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VC predictions for 2024

The past year threw the VC industry into a spin. Funding for European startups plunged over 40%, while VCs themselves struggled to raise money. The IPO market was all but boarded up and LPs began impatiently tapping their feet amid a dearth of returned capital.  

But the year clearly wasn’t a dud for some sectors. European AI companies raised some of the continent’s biggest funding rounds in 2023, with Germany’s Aleph Alpha and France’s Mistral securing huge sums. VCs predict that AI will be one of the big trends to continue into 2024.

“2024 will be the year of enterprise adoption in AI,” says Jeannette zu Fürstenberg, founding partner of La Famiglia (and a Mistral investor). She also expects 2024 will be the year of the “multi-model”. “We will see the monopoly of OpenAI broken up with the first open-source large language model at the GPT-4 level launching in 2024,” she tells Sifted. “This [will lead] to a more diversified supplier landscape, enabling new customised on-prem use cases and will allow the infrastructure and tooling space to flourish.” 

There will also be more consolidation among VCs in 2024, particularly in Germany, predicts Nirwan Tajik, growth equity investor at Revaia — a trend we saw beginning to happen in 2023 with the merger of US VC General Catalyst and Berlin’s La Famiglia. 

Meanwhile, although diversity stats among founders and VCs are still abysmal, Sophia Bendz, partner at Cherry Ventures, says there are improvements on the startup side. “We're seeing a clear increase in female founders across the European ecosystem, especially at the early stage,” she says. “I believe that the trend will continue into 2024.” 

Among VCs though, there was an exodus of women investors in 2023, and Ekaterina Almasque, general partner at OpenOcean, doesn’t think there’ll be an immediate recovery from that in 2024. “As portfolios struggle across the industry, women in leading/partner positions will continue to face immense pressure to deliver for their firms,” she says. “Women will be judged more harshly, as very often they have entered the industry recently, and won’t have the same chance to demonstrate a track record as some men in the same positions did 15 years ago.”  She adds that there will also be a heightened focus in 2024 on putting capital into the hands of women. “2024 will see the launch of a higher number of new women-led VC funds and funds with partners from much more diverse backgrounds,” she says.

Other investors are looking to history for more upbeat predictions: “Lessons from the crises of 2000 and 2008 have shown that economic downturns typically unfold over a three-year span, from the initial fall to the onset of a strong recovery,” notes Hendrik Brandis, cofounder and partner at Earlybird. “Considering that the decline began in November 2021, we can expect the current tech cycle to conclude in the latter half of 2024.”

Do you agree? Disagree? I want to know your predictions for the venture landscape in 2024. Send me a line.

And to keep up with the latest analysis, new funds and VC industry moves throughout the year, sign up to our Up Round newsletter, out every Friday. 

—Anne Sraders, senior reporter

Watch: How startup founders actually get stuff done

During our latest Sifted Talks, experts from Kahoot!, Balderton, Slack and NatureMetrics shared their productivity and wellbeing tips to start the new year off strong. 

💼 PASQAL changes CCOs: After two years as chief commercial officer at the French quantum computing startup, Benno Broer has left to start his own thing — a new company called Science Rockstars, operating in stealth in the fields of high-performance computing, science software and AI. 

• Broer has been replaced by Joel Kremer, who was previously head of sales at US SaaS company CloudBlue.

🇫🇮 Finnish supply-chain software unicorn RELEX Solutions has acquired Optimity, a Swedish supply-chain planning software company, for an undisclosed amount. Sifted recently caught up with RELEX cofounder Johanna Småros — listen to the conversation here.

💰 Robin AI announced its Series B round yesterday, confirming our previous reporting. The UK-based legaltech startup sells software that uses generative AI trained on legal documents to help companies draft and edit contracts.

• Founder and CEO Richard Robinson tells Sifted it will use the £20.6m funding to bolster its engineering, product and sales teams after revenues increased 5x in 2023.
• Singaporean sovereign wealth fund Temasek led the round, which also featured previous backer Plural alongside new investors AFG Partners and Nik Storonsky’s QuantumLight.

💸 Ex-Anthemis partner Ruth Foxe Blader is launching her own VC firm, Foxe Capital, which will invest globally but will be based in New York City.

• TechCrunch reported that Foxe Capital will continue investing on behalf of Anthemis and essentially manage the fund Blader was hired to run in 2017 — once that capital has been deployed, the firm will focus on fundraising.
• Former Anthemis investment associate Kyle Perez has also joined as a partner and WVC:E cofounder Sophie Winwood has joined as an operating partner.

🤖 2023 might have been the year of AI taking over VC boardrooms, but 2024 could be the year that it starts entering your love life.

• More and more AI girlfriend platforms are popping up across Europe, as entrepreneurs see that synthetic sex sells — and some of them are making 10s of thousands of euros in monthly revenue straight out of the gate.
• Rollo Carpenter, who founded Cleverbot — the AI companion that inspired the movie Her — says that people have fallen in love with his machine, and that many have found speaking to it hugely positive.
• “People like to effectively vent or express things to a machine in a way that they wouldn't to the people they have around them,” he tells Sifted. “Many people have told me that it's really been important to them.”

🧐 How do I get a job in VC?

🌱 2024's climate tech predictions.

🤝 European tech’s top VC-backed M&A deals in 2023.

🩺 I gave up being an NHS doctor to found a startup. Here's what I learned.

💻 More qubits, more money, more mergers: Quantum predictions for 2024.

Why communities need more than just founders (Sponsored by BOLD Community). 

💰 On January 24, Sadia Nowshin will be bringing together a panel of startup founders and revenue leaders to dig into their 2024 plans for boosting revenue. RSVP (it's free).

🌱 You're also invited to our first pitch event of 2024 on January 30, where we'll be showcasing five early-stage startups in VCs' new favourite vertical: climate tech. RSVP (exclusively for Pro subscribers).

👀 The tech and startup events Sifted will be attending in 2024.

• Sign up to our specialist newsletters if you want more on fintech, climate tech, startup life and VC.
• Tune in to Sifted’s podcast, Startup Europe.
• Join Sifted’s journalists for live Sifted Talks with industry experts, diving into the biggest questions facing startup Europe.
• Access investment-grade research on the hottest sectors, rising stars and success stories from across European tech by subscribing to Sifted Pro.
• Follow us on LinkedIn and X.