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Jason Lemkin: Predictions for 2024 - What Does a Trump Administration do for Startups? | E1099
- SaaS growth is expected to face a permanent shift relative to GDP due to market saturation, making sustained spending growth difficult without legacy giants fading and rendering the sector mature enough that global GDP cannot support indefinite software expansion.
- Public SaaS companies are projected to abandon waiting for improved multiples in favor of "growing up," with an IPO wave potentially led by Stripe and ServiceTitan (possibly in Q1) occurring between late 2024 and early 2025, potentially accepting valuations lower than previous funding rounds.
- The venture capital definition is shifting from chasing unicorns to "decacorn hunting" for 10x returns, driven by a permanent realization that only "great" founders with maniacal urgency can generate returns, while "good but not great" founders and managers face a purge.
- M&A activity is anticipated to rebound in 2024–2025, focusing on bolt-on acquisitions in the $100–400 million range, whereas large transformative deals face regulatory hurdles, though private equity may also return if inflation or interest rates decline.
- Enterprise AI budgets currently remain zero or undefined, likely sourced from existing IT budgets rather than new allocations, while public SaaS stock prices may rise in 2024 driven by efficiency and pricing power despite low new logo growth.
- Venture funding landscapes will bifurcate between stressed funds needing to recycle capital and unconstrained sources like Asian family offices and sovereign wealth funds, with junior VCs facing job losses if they fail to deploy capital every 12 to 18 months.
- Founders will face increased scrutiny regarding fundability at board meetings, with a reliance on single catalyst investors for rounds as pro-rata participation from existing investors becomes harder, while the "funding winter" is not expected to worsen in 2024 despite delayed massive liquidity events.
- SaaS media and events businesses like Sasta may benefit if marketing budgets reflate in late 2024, though scaling revenue to $100 million will require overcoming logistical hurdles and increasing human capital despite a goal to match 2014 investment paces.
- The IPO market timing may shift by six months into 2025 due to a late start to the year and mediocre recent IPOs, while Databricks is expected to delay its public debut to taper losses and avoid public pressure.
- Investors will increasingly prioritize differentiation and DPI (cash back) over historical performance, and the venture model will continue to rely on specific 12 to 24-month windows of hyper liquidity and multiples to generate returns.