Evidence from 2H 2023 and 2024 strongly supports Sacks’s forecast of (a) widespread down/structured rounds for 2021‑vintage startups and (b) a bifurcated market where AI attracts most new capital.

1. Down rounds, structure, and recapitalizations for 2021‑era deals

• Carta and PitchBook data show that from early 2023 onward, the share of flat or down rounds in the U.S. stayed near post‑2022 highs, with about a quarter of all Q1 2024 financings globally at flat or reduced valuations and U.S. flat/down rounds above 26%—the highest proportion in more than a decade. (zephyrnet.com)
• Preqin found that down rounds jumped to an unprecedented 27% of all global venture deals in Q4 2023, up from 14.5% the prior quarter, confirming that by late 2023 a large share of financings were already repricings. (linkedin.com)
• Legal/market overviews note that in 2024 nearly 25% of U.S. VC deals and 18% of European deals were down rounds, and investors often imposed “investor‑friendly” terms such as warrants, convertibles, and other structured instruments to take advantage of falling valuations. (practiceguides.chambers.com)
• VC commentary aimed at founders explicitly says that “structured rounds…returned in full force over the past two years as late‑stage companies reel from the heights of 2021,” and that companies mispriced in 2021 face a choice between down rounds or structured rescue financing. (1984.vc)
• A Financial Times analysis of U.S. startups in 2024 describes a 60% jump in failures as many ran out of cash from the 2021‑22 boom, while new funding became scarce except in favored sectors—clear evidence of the “medicine being taken” for peak‑era valuations. (ft.com)

2. AI as the “hot area” vs. everyone else (bifurcated market)

• Global VC investment in 2024 was roughly flat year‑on‑year and still 55% below the 2021 peak, but AI funding grew more than 80% and accounted for close to one‑third of all venture dollars, driven by mega‑rounds for xAI, Databricks, Anthropic, OpenAI and others. (barrons.com)
• Analyses of 2024–25 VC flows show that AI represented only a small fraction of total deal count (e.g., ~3% of U.S. rounds in 2024) but 15% or more of invested capital, with “enormous Series Bs at punchy valuations” for AI while non‑AI startups “fight for any remaining capital.” (thatwastheweek.com)
• Multiple industry pieces explicitly describe the situation as a “tale of two cities”: AI funding surged (e.g., +62% to $110B in 2024) while overall startup funding fell double digits; sectors like fintech and climate tech saw large declines and struggled to raise. (esinli.com)
• Data from Kruze and others indicate that by 2024 a large majority of new capital for many startup portfolios was going into AI, even as failures and shutdowns climbed among non‑AI companies that had raised aggressively in 2021–22. (ft.com)

Taken together, the data from 2H 2023 through 2024 show (1) historically high levels of down and structured rounds affecting many startups that raised at 2021 peak valuations, and (2) sustained, outsized investor enthusiasm for AI deals while most other startups faced a harsh funding environment. That closely matches Sacks’s prediction of “a lot of medicine,” widespread down/structured rounds, and a bifurcated market where AI remained the clear funding magnet.