12/27/2023: 2024 Prediction: Great Time to Invest in Seed Extensions and Series A

As expected, 2023 was a difficult year for startup investing. Investors had to stomach many startups shutdowns but pre-seed and seed valuations were still too expensive. In 2023, the number of IPOs went down to below the 2020 level but investors and LPs really need the exits to have more capital to invest back into startups. As we approached the end of the year, I observed improvement in deal quality and pricing compared to early 2023. Startups who raised in 2021 and early 2022 are running out of money. Companies who didn’t achieve product-market fit mostly wound down with investors’ understanding. But many companies who made good progress are having trouble fundraising. The best case scenario for them is to raise a new round with flat valuation. The next best case scenario is to accept a down round with existing investors’ consent. They could also recapitalize or shut down the company but that’s obviously not desirable. It’s a very tough fundraising environment out there. At the same time, I start to see  great bargains emerge for investors who have capital and conviction. In 2024, I look forward to investing in startups who started before or during the pandemic, have achieved PMF but need capital to get to profitability. These deals are going to get priced at very reasonable valuations and founders are going to stretch every penny they have to get to default alive. I post all my startup investments on my fund website. Let’s revisit this in 2030 and see how my 2024 deals perform. My prediction is that the return is going to be amazing.