Start-ups returning to providing hyper localised solutions: Sanjay Sehgal

The start of a new year is seen as bringing in new operational efficiencies, stronger strategies, a far greater emphasis on building deep bonds with various stakeholders and consumers. In keeping with the current market ecosystem, technology and a human approach are seen as going hand in hand. As 2024 kicks off, Adgully has approached key industry leaders to Crystal Gaze into 2024 to highlight the major trends and developments that they see dominating the industry in the year ahead.

In an exclusive interaction with Adgully, Sanjay Sehgal, Chairman & CEO, MSys Technologies, Venture& Angel Investor, Philanthropist, highlights the key trends in the Tech industry in 2024, the challenges, as well as strategic plans and goals for the year ahead.

Key trends dominating the VC industry in 2024

AI is the current most touted trend. But it is the destiny of a new trend to first reach unexpected heights, then plateau and plummet. This industry norm was rather an abrasive wake up call for the tech industry as the sheer scale of credit squeeze and staggering losses mounted. It is worth noting that news cycles of 2023 gave us an impression that all is well even after one of the biggest slumps and massive layoffs, by waving the bright torch of Generative AI. But the 2024 VC industry outlook demands tangible growth, sound business models and more than anything else, a promised fast-track of the product’s potential to be acquired by tech giants.

Major expectations from 2024

AI startups will continue getting larger shares of the seed money, but investors are more likely to also exit them if they continue yielding low capital and looming threat of regulation in various parts of the world. This is an obscure problem to navigate the gold rush tech trends as it may be too early to bet on AI products beyond Gen AI and too late if they align well with target market demographics and policies.

From this problem arises a new opportunity of identification of strong insight based start-ups that fundamentally solve problems, niche or mass, and gearing up for the 2025 phase of tech IPOs. Some vigilant investors are holding out for the IPO market to ripen, anticipating public listings of tech companies in FY25 from the April-June quarter onwards. Even the AI FOMO of the investors is expected to wear off, and global tech investments in AI will stabilise, where only the big leagues in the game would be able to demand the current level of funding.

This turmoil of funding brought an eventual closure of thousands of companies that solely were dependent on VCs. According to global estimates, approximately 3,200 private venture-backed US companies have gone out of business this year. When combined, those companies raised north of $27 billion. This also resulted in massive world-wide layoffs, over 240,000 jobs lost in 2023, a total that’s already 50% higher than last year and growing.

The year 2023 saw mass workforce reductions that included even tech giants like Google, Amazon, Microsoft, Yahoo, Meta and Zoom. The trend of massive layoffs is towards its fad end as the industry and markets adjust to the macroeconomic factors and an overall course correction in light of the current situation.

Key focus areas for the industry in 2024

Profitability and sustainability of the business model will be an aggressive decisive factor in deciding the fate of tech startups. AI fad will pass and investments required to power up such expensive infrastructure will eventually dry up for small companies. We are slowly going back towards the simpler times, where hyper localised solutions fixated towards solving problems of targeted communities is making a huge comeback!