What’s the private equity and VC outlook? We asked expert John Flemming, Managing Director at CIBC Innovation Banking. His group specializes in financing very early stage technology companies. They provide debt financing to revenue generating, institutionally backed companies all through the life cycle – from early stage (Seed/Series A), growth stage (Series B and beyond), and later stage buy-out. For technology heavy markets like Seattle, this kind of funding is a key indicator of the strength of the economy, and thus a good barometer for what hiring and growth will look like in the future. 

His summation of the last year? “We’ve seen a slowdown in funding, due to inflation and rise of interest rates,” says Flemming “In those conditions, with borrowing costs going up, companies often borrow less or might choose not to seek debt financing.”

However, good news is on the horizon: right now, inflation is declining and the Federal Reserve has chosen to pause on increasing interest rates. This is all good news for the equity markets and will encourage the innovation that funding emerging companies brings. 

Flemming notes that funding activity is already starting to pick up, and anticipates even more in 2024, with a full rebound to previous levels in 2025. 

What does this mean for recruiting and hiring at tech companies? It’s good news. With many recent layoffs in tech, it means it is currently not as competitive market to find a good developer, which is key for software companies. There are many qualified people available. The continued growth of ChatGPT and other generative AI will also impact the market for developers, as those applications ramp up coding skills. Some of those folks on the sidelines also might choose to be the next founders of startups. “The next wave of hiring will take place at early stage companies,” says Flemming. 

Flemming notes that Seattle is an early stage town. Companies are started here, sold, and new ones started. Unlike Silicon Valley, Seattle is a lifestyle choice, and people move here for that reason. It will always be full of opportunity, and that isn’t changing anytime soon. At TalentReach, we’re looking ahead to 2024 with optimism and can’t wait to see the next big thing funded by Flemming’s organization and others like it.