Introducing Investor Insights

In 2024, tech companies were expected to have raised a huge $320 billion. While the market may have slowed since 2021, the large sums underscore just how intrinsic VC and PE funds are both to the tech industry and the global economy.

Given this landscape, it’s unsurprising that engaging prospective investors is a central communications objective for many startups and scaleups. So, to understand more about what tech VCs are looking for, the trends they’re seeing, and the communication challenges companies face when looking to fundraise, TFD went straight to the source: the investors themselves.

What technology has been the most interesting to you this year and why?  

AI is still the rage – it remains both hype and disappointment. However, it represents the best new building material for all the castles of industry that need modernising.

What sectors or trends are you most excited about in the next 12-18 months? 

Vertical SaaS will offer the best growth opportunity because it’s where AI can harness the largest body of contextual structured and unstructured data and drive end-to-end automation with generative AI – BuildOps, Document Crunch and Rapid Canvass are three key examples.

We’ll see this type of hypergrowth progress across every vertical in the next 12-24 months and this will challenge common beliefs and assumptions. Historically, many investors were nervous about vertical plays because of the smaller TAM (total addressable market). However, AI seems to offer a great chance to collapse adjacent sectors into itself, thus expanding the TAM.

In addition, AI agentic systems will help us evolve from needing to master all the IT complexity, to more focussing on user intent. We’ll go from telling computers/software how to do something to telling AI what we want to achieve – that’s the seismic shift, and it’s going to massively accelerate over the next two to three years. These agentic systems will match the level of industry experts and advance the entire spectrum of effort forward dramatically.

Has the rapid rise of generative AI impacted your investment strategy? 

Yes. This is the biggest shift since cloud and mobile - but it will be both much bigger and much swifter.

Team and product market fit have historically been the key drivers of investment returns. However, over the next few years, investors will place a higher premium on strong pools of AI talent vs known product market fit.  Just as every company needed to become a software company – every company will need a demonstrated competency with AI.

Are there any under-the-radar technologies or sectors you think are poised for rapid growth? 

Yes - and there are a lot of possibilities here. Technology disruption often emerges from the mundane, when multiple engineering evolutions converge and conspire into massive paradigm shifts. The changes can often seem slow but then rapidly accelerate. We saw this with digital music replacing the mundane of the record and the iPhone replacing the mundane of voice communications. We’re seeing many disruptive plays in well-known industries such as security, infrastructure tools, application creation and monitoring etc.

It’s been a horrendous year in global politics. How do you think the current macroeconomic environment is shaping the tech investment space? 

Major disruption happens when we least expect it, and often not in the places we expect – if this wasn’t true, we’d all be billionaires!

Irrespective of global economic strength or weakness, the next two - five years is likely to be one of the best times in history to invest. Many of the structures that have upheld our ideas are likely to be shaken…politics, religion, economics, education, and even our ideas of fairness. One way or the other we are on a path to acknowledging the profound changes that we’re all about to encounter. Some will transition easily and others, who want to be unique or find safety in certainty, will have a harder time. Technology will continue to play a key role.

How do you see emerging markets contributing to the global technology landscape in the coming years? 

A key asset of emerging markets is a youthful, talented, and low cost workforce. With the rise of 5G, 6G, AI, and a robust internet, as well as a faster pace of innovation, more companies will expand their teams beyond their own borders. One of our portfolio companies, Multiplier, is riding this wave. Companies can now hire, onboard, manage and pay global talent in over 150 countries in minutes.

Do you have any advice for founders on how to get noticed in the tech space? 

Keep developing, keep innovating, keep talking to customers, and never think linearly – it never works that way. Try to find some early wins with some key design customers / partners and don’t be afraid to kill your sacred cows – stay lean until you’ve found your fit – then scale it exponentially.

What mistakes do companies make when communicating to investors?  

Come with conviction but don’t be arrogant. Outline what you do, why it’s needed, what’s and what’s sustainably different from your competitors. Stay away from jargon and consulting like buzzwords – investors are looking for facts so give it to them, but also wrap that in a story or narrative that can resonate intuitively. They want to feel your belief in the mission and believe that the market is ripe for disruption -  and that you’re the best person to do it. It’s ok to show an aggressive financial plan but it needs to fit your story – not be a wild fantasy.

How do you keep up to date with new companies, trends etc?  

This is really hard – not all trends manifest into good investments and not all good investments are associated with a known trend. Following the trends can be as poisonous as it can be helpful. Asking the horseshoe blacksmith about the new internal combustion engine you just saw or the candle maker about the new light bulb, would be counter-productive. The best you can do is to talk to many people with a cross-section of divergent views to try to form your own convictions. As usual, there’s little substitute for homework.

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