Feb 18, 2022
Startup Investments: Factors Driving Growth in 2022 and Beyond
It is widely admitted that 2021 was the year of regaining growth in the startup investment ecosystem, and 2022 has been seen as a year of opportunity. The emergence of hybrid working, supply chain difficulties making headlines, and the reemphasized significance of sustainability and climate change in business provide opportunities for entrepreneurs and their quickly expanding startups to address problems and contribute fresh solutions. Although there will be more uncertainty in the coming year, entrepreneurs will have an unmatched chance to disrupt markets, draw venture capital (VC) firms, and establish themselves.
Technologies: The Dominant Driver
The VC ecosystem is starting to resemble the only source of vitality left in a world economy that is mostly devoid of fresh concepts. In 2021, record amounts of money were invested in the venture capital sector. The year 2022 witnesses an increase in investment because of increased reliance on the creativity, efficiency, and problem-solving abilities provided by VC-backed technologies. A few trends and technology have been influencing investment choices and cycles currently. John Lervik, the founder of the industrial data ops company Cognite, claims that the contribution of industrial technology to reducing global warming is still underappreciated. Digital software tool deployment is now a need for industrial businesses. The startup investment India ecosystem is all set to capitalize on this high-growth segment.
To tackle environmental issues, advanced analytics, AI, business intelligence, and cloud tools will all be crucial. These tools will support sustainable business practices through more transparency, higher production efficiency, and better energy management. As more businesses adopt automation and digitization, data is starting to play a bigger role in environmental decision-making.
The Next Tech Paradigm Shift- Meta Hype
Venture Capitalist firms and other startup investors are keeping a close eye on the next tech paradigm shift- the metaverse. Even though it is still in its infancy, the metaverse is already beginning to take shape as an extension of the physical world thanks to cutting-edge innovations in blockchain, virtual reality, augmented reality, AI, and non-fungible tokens (NFT), and many other fields. The effects on workplace dynamics, participant or employee job satisfaction, and businesses themselves will be profound. As the metaverse focuses on building a user-focused economy, which in turn will financially benefit thousands of people and this transformative capacity of the new tech has been attracting VC firms, and startup investors and the trend is likely to continue in future. For example, Silicon Valley-based startup striver is already working with Bank of America and Walmart, providing the necessary infrastructure to train employees in virtual reality.
The concept of 'meta' has risen to the top of most innovation agendas due to ongoing technological advancement, remote labour, decentralization, and the rising emphasis on virtual worlds. Even the name has been appropriated by a conceited tech behemoth. But it's becoming obvious that meta development cycles take much longer than initially thought, that more hardware innovation is still required, and that application domains are thus still constrained. Big Tech will attempt to control the metaverse, but it will face serious obstacles from shifting power dynamics, IP/content rights, and the rapid decentralization of technology, particularly the increased use of blockchain. The new technologies play a transformative role in the sectors like education, retail, tourism, healthcare and entertainment. Startup investors and Venture Capital firms India would continue to grab the opportunity beyond 2022 in these sectors.
Healthcare: The Rise and Rise of Tele-Medicine
Digital platforms will continue to take centre stage, moving beyond the present apps that link patients and therapists to supply more self-service solutions, given the current severe lack of health clinicians, many of whom are also dealing with burnout. In 2022, patients will have more treatment alternatives thanks to psychedelics' maturation and expanding support, just as video consultation and telemedicine have established themselves as essential components of the healthcare supply mix. The deployment and delivery of psychedelic-focused therapy will heavily rely on technology. Although current technologies are still in their infancy, they will give millions of individuals who are currently without access to treatment more access as venture capital investment rises. Healthcare's adaption of virtual reality is a reality now, and going forward; it will be a dominating factor. Capitalizing on the metaverse's promising features, healthcare companies New York City-based Medivis and Los Angeles-based Embodied Labs are currently employing HoloLens to train medical workers with 3D anatomy models and 360-degree video tutorials. The opportunities are immense for investors as well as startups working in the healthcare sector.
We have all experienced interruptions and shortages as customers and enterprises because of supply chain flaws. A perfect storm for the global supply chain formed in 2021 due to a wave of harsh weather and a lack of employees and cargo space, putting additional pressure on businesses to redesign how they produce, market, and move their goods. Businesses are focusing less on reducing costs and more on developing the ability and resilience to withstand upheaval, and as a result, the supply chain is on the edge of revolution. This will probably result in businesses moving their operations closer to consumers. Seventy-five per cent of businesses reported reshoring activities to their home bases or neighbouring countries in Bank of America research.
Last year, with a record number of new unicorn companies and an accelerated pace of investment, global VC funding set new records. Although this is good news for business owners and the startup community, it also means that funding competition is at an all-time high. Many venture capitalists (VCs) have a history of investing in the same kinds of ‘obvious’ businesses over the past few years. This will continue in 2022, but I anticipate that many will pivot and aggressively look for new business models. Fintech and AI were two of the year's major highlights, but the coming 12 months will see many new ventures and funds join the re-invention wave.
Those concentrating on reimagining or optimizing company structures and procedures in response to the pandemic's problems will fare particularly well. The right brand has the potential to revolutionize contract administration, supply chain management, and warehousing, and many VCs will be keen to invest in this innovation. Faster technological learning and the introduction of useful apps will have a favourable influence on routine operations. Innumerable new integrations and use cases will be created using AI applications, whether they are employed in autonomous vehicles, warehouses, or even general distribution. There is a tremendous opportunity for startups to capitalize on it, with the organizations that make it possible for AI to be inextricably knit into the operational framework of any business standing out.
The climate catastrophe and sustainability have now taken centre stage in the public mind thanks to COP26. In order to achieve sustainable growth, job creation, and action on the climate emergency, several developed and developing countries have set their eyes on developing a reputation as a nation known for cutting-edge technologies and green innovation.
The Way Forward
Growth is what all startups look for. It is a dominating factor in the startup ecosystem globally and will continue to drive growth in 2022 and beyond. To achieve this, they require investment. VC firms and startup investors not only focus on the elaborate business plan for funding but their capacity to adapt to new technologies as well. VC firms and investors come with a degree of risk, but every venture capital firm also keeps in mind that even Apple and Microsoft had started as startups.