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Venture is cyclical—and so the headlines read, “Venture Capital Is Dead” every seven to 10 years. This time, it just took 15.

I kicked off my career precisely as we hit the last downturn. We closed a $400 million fund the week Lehman crashed during the global financial crisis. That fund turned out to be a monster success with portfolio companies including Doximity (DOCS), Lending Club (LC), and Check (acquired by Intuit). At that time, it was the iPhone, and the demise of the walled garden, as a powerful accelerant, creating opportunities for new companies and incumbents. Now it’s generative AI.

I believe this is the most exciting time to be investing in venture capital in over a decade—since the last downturn. On one hand, it’s not easy out there. The macro environment of rising rates, economic uncertainty, and global instability is causing investors to pause. Funding for startups dropped 48% year over year, and as a result, companies must become more selective with their scarce resources. Similar to 2009, venture capital firms have record amounts of cash to invest, but they are not deploying it into new deals. Nearly half of the A and B rounds in 2023 were led by insiders protecting the overheated valuations from 2021. We will see this trend continue as the later stage market remains frozen.

On the other hand, the best companies are grown in an environment where founders have to make tough, thoughtful decisions about where to spend their time and money. For companies that can secure funding, the competition for talent and ad dollars has eased up. Generative AI is spawning new companies and advancing existing ones.

With all the benefit of hindsight, here are six trends I predict we’ll see in the coming year.

1. The air will come out of the AI balloon, as new AI companies and use cases severely outpace AI computing capacity

Few tech innovations have seen ecosystems grow as quickly as AI. ChatGPT was only made widely accessible in November 2022. Yet one out of every $4 invested in startups in 2023 went to AI. The open-sourcing of many AI models, and relative ease of developing new use cases from these models means we’ll continue to see an explosion of AI startups. It’s true that the AI innovation we’re seeing is meaningful and cool! But let’s also be realistic: Compute capacity and costs will not easily scale to meet the demand. And incumbents with existing customer bases and unique data will likely be the major benefactors.

Most AI startups can’t even get access to the computing power necessary to scale their applications, to say nothing of affording it in a competitive marketplace. Even Big Tech is struggling to find profitable use cases, but at least they have the cash engines to support long-term experimentation and development. Google, Amazon, and Microsoft are writing some of the largest checks into the foundational models from OpenAI and Anthropic—in exchange for contracted cloud spending on those FAANG platforms. Some have started referring to this as “cloud money-laundering,” which all involved deny. For smaller startups out there, this just all adds up to an unfair advantage, and puts heavier pressure on getting access to that ever-so-valuable compute.

2. Elite credentials from the Harvards and Stanfords of the world will get a ‘write-down’

Growing up as a first-generation college student and attending school in Missouri, I’ve always felt a deep connection to the people that make up the geographic middle of the country. I’ve also lived in Europe, where, unlike in the U.S., vocational trade schools are popular alternatives to a four-year college degree. These vocational programs provide graduates with a professional career and standard of living, whereas college graduates in the U.S. often find themselves saddled with debt and unemployable. Vocational programs should be a strong and viable alternative in the U.S., and we should stop pushing everyone to go to college. We should instead ensure that we provide training and education for students to acquire skills and earn a productive living.

The data is starting to bear out my bias toward nontraditional education. Four-year college enrollment is down across the board while vocational programs for trades like construction are seeing double-digit increases in enrollment. This isn’t just about white collar versus blue collar, though, as professional apprenticeships grow, too. Apprenticeships can take a variety of forms but tend to include a mix of a small wage and learning on-site, and people often supplement this with classes at a community college, which are sometimes also paid for by the company. The Wall Street Journal reported that Aon, a professional services consulting firm, drew 1,100 applicants for 90 spots in its professional apprenticeship program last year. This year, it was 1,500 for 100 positions, making the program “as selective as Cornell University and Dartmouth College.”

This rise in alternative education paths offers both financial independence (often bypassing crippling lifelong loans) and hard skills that employers are looking for. As reported by the AP earlier this year, mechanic and repair trade programs saw an enrollment increase of 11.5% from spring 2021 to 2022, per data from the National Student Clearinghouse.

What does this have to do with venture investing? If these trends continue into 2024—and I hope they do—I believe we’ll see a healthier economic ecosystem that 1) offers new paths to entrepreneurship for more people that are naturally attuned to those products and services that matter most to average people; and 2) provides the highly skilled labor required to execute against new innovations. Their contributions have the potential to unlock value and distribute it more evenly than we’ve seen in the past, driving a much-needed boost for the American middle class.

3. San Francisco: Down but not out

There was no shortage of obituaries for San Francisco as a technological and cultural hub in 2023, but it will bounce back again, like it always does—and it will be advanced by an increasing movement to get back into the office.

The city of San Francisco has always been a bellwether for general attitudes toward tech, whether looking at share of investment dollars, physical office space, or IPOs. Despite the city’s rocky trajectory since the pandemic, 2024 will see San Francisco’s resurgence as a magnet for builders. The AI boom, as just one example, will showcase the positive effects of smart people competing against and learning from one another in close proximity. OpenAI just moved into 487,000 square feet of prime office space in Mission Bay, subleasing from Uber. Anthropic plans to take over 250,000 square feet in SoMa, where Slack previously resided.

Builders and the overall startup ecosystem around them generate energy, conversation, and more building. While the collective expectation coming out of COVID was for a quick “return to office” post-lockdown, it has not occurred in full force—yet. But it’s just about here. Employees will lose their ability to slide under the radar working from home. (Even the companies I have invested in that have passionately advocated for distributed work are finding that their people want to come together regularly, and setting up these on-sites is an expensive, time-consuming exercise. Why not just work together all the time?!) The days of distributed work are numbered as people remember the joy and benefits of bringing together smart, ambitious people in person to bring products to market faster, cut red tape, improve coordination time, and ultimately, solve big problems.

There are few places where that process can rebound as quickly as San Francisco. We will see much more of this in the coming year as a new class of startups sublease some of San Francisco’s underutilized space—formerly occupied by newly slimmed down bigger corporates—at favorable cost.

4. A realistic path to profitability is cooler than unicorn status

Over the past several years, startups have wielded unicorn status as a point of pride. Now we’re seeing that inflated valuations can actually be a problem. Private valuations are arbitrary until a public listing or exit, and startups using their (inflated) valuations to take on pricey debt can be risky.

We’ve seen several big companies go down in the past few months, as they face liquidity issues when their lenders call in the debt. Convoy, a digital freight broker, went from a $3.6 billion valuation to shutting down on a dime as a debt line was called. Similarly, WeWork revealed in October it didn’t have enough cash on hand to make its interest payments. I think this is just the tip of the iceberg, as more bills come due in 2024. Debt is still flowing, but it is no longer free, given higher interest rates and tougher terms.

Savvy startups will read the room and de-emphasize valuations during new funding round conversations, if not discover benefits to keeping them low, with notably rightsized expectations when it comes to raising the next round. At the end of the day, I’m optimistic about a return to transparent, comparable fundamentals (namely, a path to profitable growth by the time a company is ready to raise a Series B) as a key driver of investment decisions. And I look forward to connecting with founders who care more about sales than status.

5. Venture capital will see consolidation (as it has before)

Free cash hasn’t just led to too many overvalued startups. Many investment managers were formed—or hired extensively—over the past few years to deploy this influx of capital. In 2007, there were 987 VC firms; by 2021, there were nearly three times that number at 2,889, according to the National Venture Capital Association.

Emerging managers, or those who have launched fewer than four funds (per PitchBook), will likely take the brunt of the impact and are anticipating their worst fundraising cycles in the past seven years. By the end of the third quarter of this year, emerging U.S. managers secured only $2.3 billion, the first time since 2016 that number has dropped below $20 billion (in 2021, this same group raised a whopping $57 billion).

Emerging managers play an important role in the VC ecosystem, making up a disproportionate number of firms outside the usual SF/NYC epicenters. They can be uniquely suited to drive diversity around where and to whom investment dollars flow.

Further, many large firms have only one or two partners who have generated real returns for their limited partners in the past decade. With that in mind, I expect to see consolidation of firms. That is, the partners at firms who have generated returns will combine to form new entities. We’ve seen this in the past with the formation of firms including Benchmark, Redpoint, and Trinity. We will also see legacy firms scoop up the best emerging managers, and this will add to the diversity of the ecosystem going forward.

6. Women executives have learned how to lean in, and more than ever before, they’re leading

There’s a new generation of younger women executives sitting at the head of the table, and we’ll see more and more of this in the coming years in the Fortune 100. The time is right for a female Bill Gates, Steve Jobs, or Elon Musk. What most excites me is that today’s cast of successful women entrepreneurs is not limited to consumer products and dating apps. We’re seeing breakout companies, public and private, being led by women across edge tech, enterprise SaaS, fintech, health tech, therapeutics, and much more. I’m thinking of Gwynne Shotwell (SpaceX), Melanie Perkins (Canva), Julia Hartz (Eventbrite), Jennifer Doudna (Crispr), Adi Tatarko (Houzz), Christina Cacioppo (Vanta), Cristina Junqueira (Nubank), Daphne Koller (Coursera), just to name a few. At a time when it’s all the more important for today’s creative tech entrepreneurs to make tough, thoughtful decisions, I think we’ll see even more women rising to the occasion. Call me biased, but I think this is a very good thing.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.