Teknovations Series: Investor Outlook 4

Teknovations asked investment experts from around the region a series of questions for this year’s annual Investor Outlook Series. Managing Partner Eric Dobson tackles the question of valuations.

“Valuations reached unbelievable levels in 2022 and early 2023 before more realistic thinking took hold. What do you forecast for 2024 and beyond? Will lower valuations prevail or will there be an upward trend over the next 12 to 24 months?

Eric’s answer:

“A correction was due, and it happened. Normally, down-rounds would be the death of a young company, but they became so prevalent that the stigma was released. Valuations are going to continue to drop in my opinion. The SSBCI (State Small Business Credit Initiative) is hitting the streets now. It will accelerate in 2024 due to programmatic requirements. All SSBCI investments require a 1:1 private capital match. So, companies that have been approved by Launch Tennessee are going to be in fierce competition to get investors to commit limited capital resources, which sounds like a strong buyer’s market to me. The SSBCI program, known as “InvestTN,” offers entrepreneurs great opportunity. However, it fails to incentivize investors in meaningful ways. My advice to companies seeking private capital to match SSBCI capital is be prepared to compromise on terms.”

Read the other answers to this question on Teknovations.Biz.