At a Glance
There’s no better time to establish your startup. Technology thrives when there are problems to solve and this decade has thrown open the Pandora’s box. The economic instability due to the corona virus pandemic in 2020 and the Russia-Ukraine crisis in 2022, has caused a rise of venture capital investment in startups focused on future tech that can tide over these crisis and possibly give high returns on investments.
Now, what does that mean for an early stage startups looking for venture capital investments to scale their operations? This article is going to answer precisely that by focusing on the direction venture capital is likely to take in 2022.
What is Venture Capital?
In simple terms, venture capital refers to the investment made by larger companies looking for new and modern avenues of development to partner with. Generally, well-off individuals, banks, and venture capital investment firms provide financial support to up-and-coming companies likely to succeed in the tough and competitive market.
Startups with a highly innovative and unique idea are the first choice for these investors. They also aid new companies that have been steadily growing since its formation. The pattern and field of these venture capital investments are briefly articulated in this article.
How does Venture Capital Affect the Economy?
Venture capital investment has existed since before the pandemic, but the recession following the lockdown negatively impacted the economy with venture capital.
Nonetheless, venture capital investment is considered an essential part of the economy, and it increases job opportunities and encourages individuals to come up with innovative concepts that will benefit the community. By financing novel and beneficial products, venture capital investment facilitates the growth of the overall economy.
Finally, venture capital investment also creates a sense of interconnection between industries within the region. There is the formation of a synergy that enables easy growth for the company and the economy.
Previous Years’ Investment Pattern
Venture capital investments have diversified over the years. Venture capitalists have been funding companies that provide innovative and socially beneficial products or services.
Consequently, they have to stay on par with the direction of growth.
Today, we are in a technological era! Most venture capitalists also keep this in mind as they look for startups to fund. In 2021, there was a rapid increase in investments within all fields of the technological sector.
A few other fields that have received heavy venture capital funding in 2021 were healthcare and telecommunications.
Trends to look out for
Here are the top four upcoming trends to keep watch for concerning venture capital funding.
1. A power shift from seed-stage funding to venture capital.
We might be in a decade of immense technological growth, and therefore there are great opportunities for tech-based startups. But we’re also witnessing a reduction of seed-stage capital.
In most stations, seed-stage capital is shrinking compared to the growing venture capital investment. Statistically, this investment pattern is becoming relatively common in business circles.
Consequently, there is minimal capital available at the foundation level of setting up a new company as a consequence of this shift. It might benefit early investors who help out with the seed-stage capital.
2. Increasing investment in companies that work on AI
Artificial intelligence is one of the fastest-growing fields of technology in recent years. Technological experts expect to see a giant boom in the AI industry every year. We can not guarantee that 2022 will be the year the AI industry finally grows. But there is a very high possibility of witnessing an increasing interest in the practical application of AI.
Often, startups looking for innovative concepts turn towards AI and its applications. Therefore, the startup sector in AI is also likely to grow exponentially in 2022.
As AI is receiving more and more focus, investors are looking to incorporate AI technology into mainstream business platforms. These startups are designed to learn faster and produce better results.
3. Special focus on industries that deal with the growth and development of Web3
Today’s article or publication on the tech world will have the phrase web3. After AI, Web3 has become the next most worked sector of technology.
The decentralized networks that web3 works on aim to reduce middlemen’s role in all online applications. Companies that attempt to create these types of tech will be in high demand in the upcoming years. Related tech such as NFTs, crypto, and metaverse are also fields that are likely to receive funds abundantly in 2022.
Popular brands from every industry have been slowly adapting to the newest platforms on web3. Consequently, there is ample opportunity for startups in this field!
4. Growth of cleantech
Climatic concerns have been the center of focus for the past few years. Unfortunately, things have not progressed positively over time—summits such as the COP26 highlight the importance of environmental sustainability in the development of modern technology.
Green technology is the latest form of tech that enables zero emissions from traditionally harmful devices.
Since the summit, venture capitalists have also taken a keen interest in all things ecology. Over 40 world leaders have committed to increasing investments in clean and green innovations that could sustainably continue the economic growth patterns.
The pandemic might have caused us to halt our lives for a few months, but the developments since then have proved that we have come back with an even faster pace to achieve everything humanly possible.
This rapid development of all major industries has encouraged more and more individuals to try their luck in starting their own companies. The increasing accessibility to venture capital funding guarantees you ample financial support if your concept is unique and good. Those of you still pondering over it, now is the right time! Don’t miss out!