M FoundationThematics | EuropeVenture Vision: 2024 PredictionsMorgan Stanley & Co. International plc+Edward StanleyEquity Strategist Edward.Stanley@morganstanley.com +44 20 7425-0840 Matias OvrumEquity Strategist Matias.Ovrum@morganstanley.com +44 20 7425-9902 Our Venture Vision weeklies look at (1) early-stage cross-theme funding patterns; (2) relative valuations between themes; (3) public versus private valuations; (4) the resulting anomalies within certain themes. Please let us know if you would like our excel database of >45,000 VC deals categorised by theme, country, value and date. We also send this file as a weekly distribution if you would like to receive it regularly. See here for our global market synopsis. See here for our longer analysis on the state of the VC market, particularly as it relates to non-US Venture and innovation acceleration. We highlight what we got right and wrong in 2023 and what we expect for 2024.• If you would like access to our 45,000 deal database, please ask• Sign up here for our weekly Venture Vision pieceThrough 2023, we highlighted the need for a Private/Unicorn valuation reset before a material recovery in exits could occur. As the year progressed, we also described why we remain correct on the thesis but were wrong on the timing of this – owing largely to the fact that the US consumer/economy remained more robust than most had appreciated. Moreover, the resilience of the funding markets post SVB allowed founders and investors to move swiftly past this otherwise potentially existential event. Below, we explain (1) our main expectations and the trends of 2023, (2) how we think these will evolve in 2024 and (3) more specific predictions for 2024.Exhibit 1:Our high-level 2024 trend expectations relative to 2023 market activitySource: Morgan Stanley ResearchOur specific 2024 forecasts 1. Larger rounds & clean cap tables: Insider bridge rounds diminish in importance and funds will make a growing portion of investments into clean cap table businesses.2. Investors vs founder pendulum: After the swing from the most founder friendly environment on record in 2020/21 to the most investor friendly on record in 2022/23, 2024 is likely to swing back to greater balance. 3. Holding period record: Individual portfolio company holding periods will hit Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision.For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.+= Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be associ...
