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Table of Contents

1. Introduction: 1

2. Emerging Trends 1

2.1 Rising Geo – Political Instability 1

2.1 Funding Winter. 2

2.2 USA Dominates but China and India on the Rising 4

2.3. Rise in AI Funding 5

2.4 Increase in Startup Failure Rate: 6

2.5. The Fear – Greed Index – The Joy of missing out 7

3. Emerging Measures utilized by Investors and Opportunities for Tunjio 7

5. Action Points 8

  1. Introduction:

This research succinctly examines the emerging market trends utilizing a doctrinal approach (news, calls, websites, social media, WhatsApp chats with Startups and investment firms). The emerging coping strategies and opportunities are also identified.

2. Emerging Trends

2.1 Rising Geo – Political Instability

Global Risks 2024: At a turning point - Global Risks Report 2024 | World  Economic Forum

Figure 1: Risk Landscape (WEF).

The above figure shows that the world is currently experiencing macroeconomic, environmental and political instability. These include high levels of inflation, exchange instability, wars and coups. This has created uncertainty for investments. For example, the Ukraine-Russia war has negatively impacted the global Wheat and Gas supply chain – resulting in higher cost of power and food globally.

2.1 Funding Winter.

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Figure 2: Global VC investments (and stages).

Flowing from the discussion in 2.1 above, we find that we are in a period of reduced investment / funding. This is driven by the macro – economic uncertainty. Though the tides have began picking up in Q1 2024 with majority of the increase in mega+ rounds – we reckon is attributable to technology and AI investments as shows in Figure six below.

2.2 USA Dominates but China and India on the Rising

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Figure 3: Global Private Equity investments by Country. The figure above shows that USA is the dominant player in the global startup and investment landscape. However, China and India can be seen as catching up over the years. This may result in a shift in the global balance of power in the tech and investment world. 

2.3. Rise in AI Funding

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Figure 4: Leading VC Investments: The above figure shows that Generative AI and Electric Mobility leads the funding space and (as per Figure 5 below) the trend is expected to continue exponentially.

Global AI Market Set to Reach Over Half a Trillion U.S. Dollars by 2024,  Despite Slump in AI Startup Funding

Figure 6: Growth of AI Market Size globally from 2018 to 2030.

2.4 Increase in Start-up Failure Rate:

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Figure 7: Startup failure rate: The latest statistics shows that approximately 90% of startups are now failing.

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Figure 8: Reason why Start-ups Fail

The above shows that the major cause of startup failure comes from the market and marketing strategies employed. Hence cash flow should not be the major metric. The major insight for Tunjio is not to invest until a startup can prove “profitability without funds”. The funding will then be made to speed up the growth.

2.5. The Fear – Greed Index – The Joy of missing out

Investors are becoming loss – averse. The Joy of missing out connotes investor’s reluctance to make irrational investments given the rising geo-political tensions and supply chain disruptions. investors are intentionally avoiding high-risk-high-return investment if the downside potential is high. An example can be seen with the NFT and  cryptocurrency market which has high instability and rug pulls, investors are now more cautious with investing in coins and “pump and dump” wishes are now fading. 

In turn, the AI Sector is experiencing significant competition and colonialization from the major players. Open AI just launched the Chat GPT limited Pro edition allowing users to use pro GPT engines (including DALL-E) free of charge, albeit with a daily limit. Most AI startups (like Perplexity, ImagenAI) offer these pro features as a value proposition and their revenue will be impacted. The AI trends reveal that “a few” entities will dominate the industry in the future, while millions of others will be constantly innovating to remain relevant. However, going by Figure 1 earlier, AI is still predicted to received the bulk of funding and investments. Hence, Tunjio can invest in AI startups after considering other qualitative factors like the Startup’s integrity and commitment to scaling the project. 

3. Strategies you can adopt:

The trends show increased uncertainty which may not ease immediately. Hence, investors should adopt survival strategies to keep afloat. Some of these strategies include:

1. Taking fewer loans for investment, except there are apparent tax benefits.

2. Invest only in purposive establishments and businesses that solve real and actual problems. These sort of businesses will remain in demand even when the market becomes unstable and investors are fearful. Even though high – return startups will scale and be extremely profitable in the future (Fintechs, Cryptocurrency, AI). However, the value in these startups will be eroded if the global situation worsens and their business model is not solution driven. Tunjio finds that the core sectors that will remain when all fails include those involved in: 

Food, agriculture and processing.

Power generation and renewable energy.

Affordable education.

Affordable Health and medicine.

Affordable housing solutions.

Affordable communication solutions.

Affordable Mobility and Transportation solutions.

3. Storing funds in precious metals and short term government bonds / bills – rather than in bank accounts. The money is then withdrawn once a good investment or business is discovered.

5. Closing Remarks

According to Warren Buffet “Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1”. This shows that the investment space is volatile and one needs to remove the greed and fear elements to focus on the real deals that can stand the test of time. Tunjio is constantly on a mission to find hidden pearls that are worth investing in, and we shall keep you updated on opportunities as they arise.

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