The Startups Investors Are Looking For and Funding

Following two years of more conservative investments in the venture space, there are early signs of a slow upturn in the market. Some of the most active investors in 2024 have been Andreessen Horowitz, Y Combinator, General Catalyst, Sequoia Capital, and Google Ventures — a mix of VCs and CVCs. Investors are increasingly more interested in startups showing revenue growth, and want to understand founders' stories and mindsets as they decide who to invest in.

"At SFC, it really comes down to the team,” shares Jason Druker, Chief Commercial Officer at SFC Capital. “Our investments are usually within three years of the first trading date of the company's existence. We take as scientific an approach as possible to assessing the cofounders (we like co-’s rather than solos). It's not about their background or ethnicity — in fact, we go the other way and invest in underrepresented founders and have a diversity mindset. We look at how a founder's personality aligns with their cofounder. We like to see somebody who's driven, then someone else who is either sales or somebody you want to follow."

Companies receiving funding in the current competitive VC space have something in common — many are AI-based tools, and the B2B segment is growing quickly. SaaS startups from seed to Series B are seeing an uptick in both valuations and round sizes as of Q1 2024, along with healthtech startups.

Key investor metrics and startup growth indicators

With profitability at the top of investors' minds, the most important metric investors want to review for early-stage startups is revenue growth rate. Since investors have slowed down their funding, they want to know that they're taking calculated risks and can virtually guarantee returns on their investments. Later, in Series A and B rounds, investors are more likely to look at annual or monthly recurring revenue once they've gained traction and established product market fit (PMF).