The VC Trends To Watch In 2022
“If 2021 was the year of re-finding progress, 2022 will be the year of opportunity.”
The last year has been fraught with challenges and unexpected volatility. Many people strive for normality and financial improvement in 2022 and beyond. For many others, the venture capital business is a source of hope. The global venture capital investment market was estimated at US$ 211.3 billion in 2021. The market is expected to reach US$ 584.4 billion by 2027, with a CAGR of 20.1 percent from 2022 to 2027.
Venture capital is a subset of private equity (PE) in which venture capitalists invest in entrepreneurs to assist them in growing their enterprises. These investors are given a stake in the company. They contribute to decision-making and give technical and administrative expertise, network access, and other services to help the business flourish.
Venture capital investment is becoming more popular since it provides investors with above-average returns while also contributing to the advancement of technology. The present expansion of the venture capital sector may play a part in energizing the economy and resolving the financial services sector. However, it is vital to note that global technological breakthroughs, as well as current public health concerns, have had a significant influence on venture capital. Let's look at some recent venture capital trends and what the future holds.
VCS WILL LOOK FOR BREAKTHROUGH BRANDS
Last year, global VC financing set new records, with a record number of new unicorns and a fast-expanding fast-expanding investment pace. While this is good news for entrepreneurs and the start-up ecosystem, it also means that financing competition is at an all-time high.
In recent years, many venture capitalists have tended to follow the same trends, investing in the same sorts of 'obvious' start-ups. This will continue in 2022, but we expect to see companies shift and openly seek new business models. The next 12 months will see the emergence of a slew of new firms and funds surfing the tide of re-invention. Many VCs will be keen to invest in this kind of innovation.
EFFECTIVE OPERATIONS ARE UNAVOIDABLE
The epidemic exposed several firms' operational flaws, including supply networks that sent food to supermarkets, consumer products to doorsteps, and chips to manufacturing plants.
When determining corporate sustainability in 2022, venture capitalists will evaluate operational resilience and effectiveness. These start-ups will stand out as the most appealing option for VCs as they create smarter and stronger internal processes.
THE YEAR OF THE AI STARTUP
Although it may seem that every year is the "year of AI start-ups," the next 12 months will see actual AI increasingly incorporated into organizations of all sizes.
AI has become a catch-all term that edges on a buzzword, but by 2022, we're more likely to see AI in operation that will spark the interest of investors. Technology will enable rapid learning and practical applications that will improve routine procedures. Venture capitalists will be searching for businesses that integrate artificial intelligence into key aspects of the economy such as storage, distribution, and retail.
VENTURE CAPITALISTS WILL LOOK FOR COMPETITOR BRANDS
In 2022, we should anticipate more pivoting away from the "mainstream," as well as investors exploring fresh markets and company concepts.
There is always a lot of competition for money. It's because a large number of venture capital companies have been watching the same trends and attempting to invest in the same start-ups for many years. Businesses that can improve the pressure areas that slowed us down during the pandemic, such as supply networks, will be given a lot more attention in 2022.
With a worldwide blockchain business of $39.7 billion predicted by 2025, cryptocurrency is unlikely to fade away very soon.
Since cryptocurrency is not as regulated as conventional investment, venture capitalists have discovered that it provides a more alternative trading technique. Cryptocurrency, like an initial public offering (IPO), employs an (ICO) initial coin offering, which enables companies to raise capital using a digital coin. This strategy has shown to be highly beneficial for both VCs and entrepreneurs searching for more flexible methods to invest or get money.