Startup and Venture Capital Trends to Watch in 2022
In 2021, we saw organisations across every sector throw themselves into recovery and growth, fearlessly adapting to the challenges facing them and investing in the tools and skills needed to futureproof their businesses.
So, if 2021 was the year of re-finding growth, then 2022 will be the year of opportunity. The advent of hybrid working, supply chain issues on the front page and the renewed importance of sustainability and climate change in business, open the door to entrepreneurs and their rapidly growing start-ups to solve challenges and bring new ideas to the table.
Uncertainty will no doubt persist, yet the next 12 months present startups with an unprecedented opportunity to disrupt markets, attract venture capital (VC) firms, and make a name for themselves.
What are the key VC and startup trends to watch out for in 2022?
1. VCs will look for breakthrough brands
Global VC funding broke new ground in last year, with a record number of new unicorns and a rapidly increasing investment pace. While this is positive news for entrepreneurs and the startup community, it also means competition for funding is at an all-time high.
In the last few years, a large portion of VCs have tended to follow the same trends, investing in the same types of ‘obvious’ companies. In 2022 this will continue, but I also expect to see many pivot and search proactively for new business models.
Fintech and AI were two of the biggest standouts in 2021, but the next 12 months opens the door for a host of new companies and funds to ride the wave of re-invention. Those focused on reimaging or optimising business models and processes following the challenges of the pandemic will do particularly well.
Warehousing, contract administration and the supply chain all have the potential to be revolutionised by the right brand – and this innovation is what many VCs will be looking to invest in.
2. Startups will disrupt supply chains – for the better
Some of the biggest challenges during the pandemic were the constant yet often unpredictable supply chain issues that ravaged multiple sectors. From the global chip shortage to empty supermarket shelves, everyone has been affected in some way.
Bolstering supply chains will remain a fundamental business priority throughout 2022, with the need to adapt to last minute threats to logistics and production continuing to be the norm.
The opportunity is there for startups and growing businesses to own these issues, creating solutions that drive a new wave of innovation. As a result, there will be new answers to obstacles facing manufacturing, sustainability, and delivery, with increased decentralisation and traceability among the most fertile grounds for innovation.
3. The year of the AI startup
I know it seems like every year will be the ‘year of AI start-ups’, but the next 12 months will see genuine AI become increasingly integrated into businesses of all kinds. The technology will learn faster and bring practical applications that will positively impact everyday processes.
Whether it’s within autonomous cars, warehouses, or even general distribution, AI applications will spread throughout multiple industries to be used for countless new integrations and use cases. It is a huge opportunity for start-ups to capitalise on, with the stand-out organisations being those that enable AI to be intrinsically woven into the operational fabric of any business.
4. Cleantech will attract investors
COP26 has put sustainability and the climate crisis firmly at the forefront of the public consciousness. The UK government has set its sights on creating a nation known for new technologies and green innovation – triggering growth, job creation and action on the climate emergency. The summit also saw 40+ world leaders committed to working together to “turbo-charge the uptake of clean technologies.”
5. VCs will look at the bigger picture
We’ve seen a real step-change towards VCs investing in, and seeking out, startups with a clear mission and social conscience. Effectively articulating everything from product roadmap to brand identity and growth objectives is key, but so too is communicating a startups’ world view and opinion on key issues like sustainability. It’s not enough to simply have a good story; it’s critical that the company’s leadership can both tell it and back it up.
So alongside being armed with financial performance and KPI data, startups need to tell the company narrative in a way that convinces investors that they are buying in to something with the potential for growth – both in terms of revenue and social responsibility.