2024 has been a cautious year for investors, shaped by global economic and political uncertainty. Key elections worldwide, ongoing conflicts in Europe and the Middle East, high inflation, and looming recession fears created a challenging environment across all sectors and asset classes. According to Pitchbook, European venture capital fundraising is poised to hit its lowest number of closes in a decade.

Lingering instability continues to weigh on investor sentiment, with the recent no-confidence votes in France and Germany, undercurrents of tension leftover from several contentious elections, continued war in Ukraine and the Middle East, and South Korea's impeachment case.

Despite these events, however, signs of stability are beginning to emerge: many contentious elections are out of the way, peace – albeit tentative – in Syria is holding steady, and the Israel-Palestine ceasefire negotiations are a step in the right direction.

Economic conditions also show modest improvement. Unemployment and inflation appear to have stabilised, enabling recent interest rate cuts and decreasing the cost of capital. Anecdotal evidence from our market soundings at Aalto suggest a narrowing valuation gap, as the lower cost of capital makes investors more open to higher premiums and companies take on more realistic expectations. Additionally, a rise in down rounds demonstrates a broader correction of the valuation premium.

While some residual wariness remains, optimism is building for a stronger 2025. Many believe that both private and public markets will regain momentum in the coming year.