But private capital investors are resilient. A VC deal now averages 10 more hours of research compared to last year. Investors are continuing to reset their portfolios with stronger investments that meet a vastly stricter set of investing criteria—transitioning away from hype and growth-at-all-costs to proven business fundamen- tals, durable long-term growth, and pro昀椀tability. Returning to offense Total VC fund count globally is up 33% over the past decade. Venture capital has never been more competitive than it is now, ampli昀椀ed by all of those investors chasing a much more select group of startups. While international VC 昀椀rms may be withdrawing from the region, Europe bene昀椀ts from a strong and signif- icant base of local investors. They’re taking advantage of this situation by 昀椀nding and closing the highest quality deals with a pivot from a defensive to an offensive approach. Venture capital is intrinsically relationship-driven: the best deals are often sourced and closed through an investor’s network. Top European VCs ranked by volume of unicorn investments are growing their networks faster than their peers by 11%—they know this is a move that drives increased and high-quality deal 昀氀ow. A year of innovation Internally within 昀椀rms, VC is on the cusp of reinventing itself thanks to an explosion of investment in data and AI. More than 60% of European investors plan to increase their productivity by automating internally manual and repetitive tasks. Almost 45% plan to leverage AI to accelerate their market research and due diligence. Investors are looking forward to reallocating that time they save to the activities AI will never do—building strategic relationships, and playing a more active role in portfolio company support and success. Externally, AI is ushering in a wealth of innovative products and services. Speaking recently, Kelly Graziadei, Founder & General Partner of F7 Ventures summarized the opportunity: “There are a couple of moments we can look back on where we saw the advent of big platforms and the billion dollar companies that spun out from them. We’re going to see the same thing happening with AI.” Whether it is operational innovation to drive e昀케ciency, or product-led innovation creating exciting new in- vestment opportunities, there’s plenty to look forward to in 2024. Whether it is operational innovation to drive e昀케ciency, or product-led innovation creating exciting new investment opportunities, there’s plenty to look forward to in 2024. Ray Zhou Co-Founder & Co-CEO, A昀케nity | 16