Every startup has AI in their pitch deck — and maybe they should | Equity Podcast

Consumer Investing

• Despite a decline in VC interest, consumer investing can be lucrative if investors focus on solving the right problems and understanding consumer priorities.
• A survey by Forerunner Ventures found that consumer businesses are more likely to go public and trade higher at IPO compared to Enterprise businesses.
• Examples of successful consumer businesses include Shopify, Etsy, Skims, and Warby Parker.
• Social media and e-commerce have enabled new brands to reach customers directly and build resonant brands, leading to the success of many direct-to-consumer (DTC) companies.
• Consumer interests have shifted towards health and wellness, especially after the COVID-19 pandemic, leading to investments in consumer health and wellness startups.
• Empowering solopreneurs and small businesses through technology is important as they increasingly adopt digital tools and strategies.

Fundraising Environment

• The fundraising environment has changed since 2021, with a decrease in funding but signs of recovery in 2023 compared to the previous year.
• Venture capitalists are becoming more cautious and selective in their investments, focusing on sustainable growth rather than high valuations.
• Seed funding is still available, but seed deals are getting bigger, and later-stage deals are becoming less common.
• Investors are requiring more traction and proof points before investing in later-stage companies.
• The Series B funding round has become more challenging for companies to secure, as investors are looking for companies with strong growth and managed expenses.
• Down rounds may be necessary for companies to secure funding and avoid running out of money.

IPO Market

• The IPO market was slow in 2022, but there is optimism that it will recover.
• The IPO market has been quiet so far in 2023, with only four companies going public, but it is expected to pick up in the second half of the year.
• The average trading multiple for companies that have gone public in the last couple of years is 12.4x 2024 revenue and 9.5x 2025 revenue, which is considered reasonable.
• Many companies that are considering going public are waiting for the market to stabilize and for the upcoming elections to pass before making a decision.
• Companies that are preparing for an IPO are building their muscles and acting internally as though they were already public, which will help them be more successful if they do decide to go public.

AI Investments

• The frenzy around AI investments is similar to the overall funding frenzy in 2021, but AI's potential to transform the market justifies the excitement.
• Investors need to differentiate between startups that genuinely leverage AI for innovation and those that use AI as a buzzword to attract attention.
• AI-centric businesses, such as chat GPT and Speechify, are attracting significant investments, while other businesses use AI to enhance their services without explicitly branding themselves as AI companies.
• AI has the potential to revolutionize personal assistance by shortening the learning curve and enabling faster transactions compared to human assistants.
• The personal assistant space is still in its early stages, and there is a lot of excitement about its potential to disrupt the market.