Atman December 2023 Update
As we bid farewell to 2023 and look towards the opportunities of 2024, Atman remains at the forefront of adapting to the evolving venture capital landscape.
A Year of Strategic Adaptation
This year marked a notable shift in the venture capital landscape, with the lowest volume of deals in recent memory. Atman responded by focusing on strategic and value-driven investments; aligning with the evolving market dynamics, we looked at hundreds of opportunities and made one new investment into fund I, proceeding cautiously.
The Startup Ecosystem: A Three-Phase Evolution of the Correction
Startups underwent significant transformations: layoffs, enhanced productivity and revenue growth, and crucial investor support through bridge funding. In our opinion, these steps, have set the stage for a more resilient startup environment.
In response to a more cautious investment climate, we placed heightened emphasis on entry price prioritization, rigorous due diligence, and strategic portfolio construction. We aim to maximize potential returns and minimize risks by focusing on securing favorable entry points. Enhanced due diligence processes ensure that we’re investing in great ideas and sustainable businesses capable of thriving in various market conditions as the bar for follow-on financing gets higher. Our portfolio construction strategy is designed to be resilient, diverse, and aligned with long-term value creation, positioning us to win even in a risk-averse world.
2024 Outlook: An Investor-Centric Market
The frenzied deal-making of the past has taught us the importance of meticulous due diligence. Our unique Atman Egregore network remains a cornerstone of our investment strategy, providing exceptional deal opportunities and a competitive edge in the market.
As we look ahead to 2024, it’s evident that the criteria for going public are more rigorous than in previous years, reflecting the market’s cautious stance. This heightened scrutiny means that only the most robust startups — particularly those that are profitable — may find favor in the public market. Consequently, this trend could limit the number of VC-backed startups capable of successfully going public, especially as many still strive to reach profitability.
Here are some of our predictions for 2024:
- The IPO window reopens: The positive economic indicators from 2023 lay the groundwork for a robust revival of IPOs in the coming year.
- Insider-Led Rounds to Maintain Momentum: We anticipate that the proportion of insider-led rounds in U.S. VC deals will continue at or exceed the levels observed in 2023, signaling sustained insider confidence in ongoing ventures.
- Changing Dynamics of Unicorns: A downward trend is expected in both the count of active unicorns in the U.S. and their cumulative post-money valuation, indicating a shift in the unicorn landscape.
- Interest Rates Influencing VC Deals: With interest rates projected to remain stable or decline, we foresee a corresponding increase in venture capital deal activities, buoyed by these favorable financial conditions.
- Accelerators Gaining Prominence: Accelerators are poised to become increasingly influential in 2024, playing a pivotal role in catalyzing dealmaking momentum and nurturing emerging startups, especially as large VC firms continue to run proprietary programs to compete against Y Combinator
Trends in VC Fund Sizes: A slight decrease in the average size of U.S. venture capital funds is anticipated in 2024, reflecting a strategic adaptation to the evolving investment climate. We are also anticipating a decrease in the number of funds.
December event and company highlights
During the first week of December, Pedro Sorrentino and Pedro Dias, traveled to Brazil to meet with LPs and prospects. We hosted an incredible assado in Porto Alegre along with our friends Bruno and Keiji, from Theocta Capital.
We bonded over great steak, wine, and meaningful conversation.
Gabriel Engel joined Pedro Sorrentino for a fireside chat where they spoke about the excitement, fear, and changes that artificial intelligence is bringing to the day-to-day at rocket.chat. Mostly positive, but some negatives as well.
Speaking of artificial intelligence, Hyperplane (Fund I portco), received excellent coverage in Techcrunch and Valor (BR), as they came out of stealth to change the way banks predict consumer behavior.
Farewell 2023, hello 2024!
As we step into the new year, Atman remains dedicated to our mission of identifying and nurturing the next wave of innovative companies. We are excited to embrace the opportunities that these market shifts bring.
Thank you for your ongoing trust and partnership.
We look forward to a year of continued success and groundbreaking investments and wish our community happy holidays with their families and loved ones.
Meet the Egregore: Michel Ank, Founder and CEO of LastLink
What is LastLink?
Lastlink is a payment and subscription management platform that helps content creators manage their earnings for digital products, which include: courses, ebooks, as well as external channels such as Telegram, WhatsApp, Instagram, and Discord.
How much capital have you raised so far?
$2M.
How many companies have you started? Two, Bume and Lastlink.
What industries do you believe you have deep expertise in? Marketing & Product Management.
What are you most excited about right now? Lastlink is about to reach breakeven and record in revenue.
What has been one of your biggest lessons so far in business? First things (product) first. The product should come before everything.
What book(s) have changed/shaped your life? The Hard Thing About Hard Things — by Ben Horowitz
If you could have dinner with anyone, dead or alive, who would it be with and why? Steve Jobs — his way of thinking changed everything, he is someone who had very distinct abilities.
What do you believe to be true that you cannot prove? God exists.
