VC & Tech Trends in 2022

The market continues to set records as we head into 2022. Will the bull market continue running wild in 2022, or will we get a correction? Venture capital has seen a sustained bull market across all assets over the last year, rather than the mini-boom in later-stage funding.

Rising prices / High-interest rates

Venture capital has benefited considerably from the impact of ultra-loose monetary policy on the availability of capital. The supply of venture capital appears to be unlimited until it isn't. Inflation appears to be on the rise, which, if met with higher interest rates, might signal the end of a decade of exceptionally cheap cash. It will likely take some time before the venture capital industry is affected, as there is still a lot of dry powder. However, keep an eye on the time it takes to close new funds and their eventual size for an assessment of the future direction of the industry.

The middle class is getting squeezed.

Series A firms are typically referenced as struggling individuals trying to make ends meet. This definition applies equally to the middle of the capital structure. With more venture capital funds than ever seeking out companies with early revenue and strong product-market fit, pricing pressures will likely remain high. Although this will be painful for investors, it will continue to be a terrific environment for entrepreneurs. Investors are likely to be keeping a watchful eye on the six sectors expected to perform well in 2022, as the aftermath of the pandemic continues to affect them.

Work in the future

There are two kinds of work arrangements in this sector: remote and hybrid. The shift to globally distributed teams and the technology that supports them is just the beginning of fundamental transformations. Freelancers will play an important role in this sector next year as they demand more control over their lives. Projected to grow at a double-digit CAGR over the next five years, the freelancer economy will give rise to substantial opportunities to build infrastructure and ancillary services.

To become educated.

Despite a few notable victories, entrepreneurs and investors have had difficulty establishing EdTech as a successful industry over the years. The query has always been, 'Who will pay?' Since schools and educational institutions lack the monetary resources to purchase a lot of technology, answering 'who will pay?' is challenging. On the other hand, education is having a renaissance, despite the fiercest battle for talent ever. Whether it's upskilling and retaining current employees or continuing education for freelancers, entrepreneurs are finding ways to make education profitable again.

Temperature and weather conditions.

The COP26 conference in Glasgow demonstrated that politicians are willing but not able to act. ClimateTech companies can help us achieve the world's 'net zero' objectives by providing real solutions. Investors are increasingly considering ESG policies, and this year will see more investment dollars flowing to ClimateTech companies as a result. The creation of a Climate 50 index, a ranking of sustainable energy transition investors, is further proof of the momentum behind it.

The provision of care.

Health tech entrepreneurs can expect the positive developments resulting from the epidemic to endure into 2022, as national health services continue to focus on epidemic prevention and treatment. The way health services are delivered has been permanently altered by the disease. Start-ups that focus on remote patient management for chronic diseases or that strive to remove barriers to research and drug development, in particular, may benefit from additional funding and less resistance from their buyers.

Automatic devices/mechanisms.

The technology-driven reduction of human reliance or human replacement is still gaining momentum. First, technology can now replicate a wide range of human activities. This year, we are still decades away from AGI (Artificial General Intelligence), but business and industrial processes can now be carried out reliably by machines. Second, the labour shortages that emerged as the global economy rebounded from the pandemic look set to continue. In the past, automation was believed to cause job losses, but now the companies simply need technology solutions to continue operating.

The chain that links an organisation's suppliers to its customers.

The post-pandemic recovery has demonstrated to us how disorganized the world's supply chains are. The technology-driven solutions that entrepreneurs can offer to address issues that large, slow-moving corporations have difficulty with would therefore be extremely advantageous. Whether it's new transportation technology or real-time big data analysis that provides actionable insights, there will be significant funding for start-ups that help the world's goods move again.

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