Feb 18, 2022
Emerging Technologies: Making Startup Investors Bullish
The world economy faces several challenges due to the cascading effects of COVID-19, the Russia-Ukraine conflict and aggravating China-US tension, but new technologies still dominate the global investment ecosystem. Startup investors continue to be bullish on emerging technologies disrupting almost every industry. They have been capitalizing on the opportunities that are being offered by emerging technologies.
New revolutionary technologies are emerging at an almost constant rate due to the unparalleled pace of innovation. Startup investors have a compelling opportunity to participate in the trend as new tech firms battle with established businesses to disrupt every industry. According to GlobalData, a data analytics firm, the number of unicorns—private companies valued at or over $1 billion—will have increased due to increased investments in fintech startups to over 116 by the end of 2021. They are worth about $529 billion collectively, which is roughly 50% more than JPMorgan Chase-the biggest bank in the United States. The way we live and work has already changed. This has happened because of the ongoing development and reinvention of new technology applications in fields like healthcare, mobility, and education. Emerging technologies such as Data Science, Cloud Computing, AI, DevOps, Blockchain, RPA (Robotic Process Automation), Augmented Reality (AR), Virtual Reality (VR), and Cybersecurity is expected to penetrate several sectors in the future.
Intelligence and Investment
Fundamentally, AI aims to simulate human intellect more accurately and quickly in a computer or other system. Companies like Apple and Alphabet use the technology to programme machines to carry out jobs that were traditionally performed by humans, like problem-solving and question-answering. And like the human brain, the more data AI gathers and keeps, the more potential it has. For instance, AI is used in the banking sector to enhance decision-making in high-speed trading, automate back-office tasks like risk monitoring, or even cut expenses by placing humanoid robots in branches. Similar to this, AI controls Netflix's movie suggestions and self-driving cars.
AI gradually becomes smarter by means of techniques like machine learning, an area of AI. Machines may quickly store and interpret new data by integrating big data, sophisticated computational models, advanced mathematics, and other techniques. And the accuracy increases with the amount of input they receive. Currently valued at just under $1 trillion, the business is expected to increase in value to $14 trillion by 2030, according to Ark Invest.
High on Healthcare
The Covid-19 outbreak provided an unexpected boost to many founders in the health technology industry. As the access to medical services was severely constrained, and digital solutions became a necessary service, business models that emphasized remote patient management and care saw tremendous growth. Other pandemic support startups had accelerated procurement procedures and shortened sales cycles as well. As the world continues to combat the epidemic and the backlog of people needing care in other specialities, this encouraging trend will last beyond 2022.
With 25 healthcare businesses it backed in the second quarter of 2021, healthcare-focused VC Company OrbiMed Advisors topped the list. Along with the accelerator programme i2020 and the European venture capital firm BioGeneration Ventures, the investor also supported funding rounds for many firms operating in stealth mode. Other notable investors include Alexandria Venture Investments, Hillhouse Capital Management, and RA Capital Management (which together backed 24 firms in Q1'21).
Robotics and Automation
Businesses are using robotics and automation to design robots to perform human-like jobs like driving or even preparing the ideal coffee. These devices can complete tasks autonomously or with little assistance from humans, streamlining workflows and increasing productivity. Industrial robots and service robots are the two primary subsectors of the robotics industry. Robotics could significantly alter the job market by creating rule-based software and slick user interfaces. According to CEO Elon Musk, Tesla is creating a robot that resembles a human being called Optimus, and it may be fully operational by the end of 2022. The robot is 5 feet 8 inches tall and 125 pounds in weight. It can carry out tasks that would be difficult or dangerous for people.
According to the Association for Advancing Automation, American businesses bought the most robots ever in a single quarter in the first quarter of 2022, spending nearly $646 million. This amount is per cent larger than it was during the same time in 2021. The extended labour market deficit brought on by the pandemic has fuelled digital investments across businesses, economists say, and the trend is unlikely to alter.
Cloud Computing: Gaining Ground
Internet-based on-demand access to data and information is supported by cloud computing, which offers flexible connectivity. Organizations are using the cloud to extend their digital aspirations, including AI, robotics, and automation, as opposed to conventional on-premises data storage. In essence, the cloud gives businesses the groundwork they need to innovate more quickly. Cloud computing keeps gaining ground across businesses, from attaining higher security to democratizing access to data within the organization. Because of these factors, businesses like Amazon and Microsoft have actively entered the cloud sector. The cloud business of the multinational retailer, Amazon Web Services, has established itself as the industry leader, bringing in $18.4 billion, or 37 per cent more, in revenue during the first quarter of 2022. Similar to this, Microsoft reported that Azure and other cloud sales increased by 46 per cent in the final quarter of 2021, following four straight quarters of increases of at least 50 per cent.
Electrification is the key to the future of transportation. The players in venture capital (VC) and private equity (PE) are more aware of this fact. They are investing substantial sums of money in automotive firms that have technology or goods that are ready for the market. Perhaps their selections are not particularly remarkable, but the speed and duration of the infusion of capital into these firms are. For the majority of Electric Vehicle (EV) or Green Mobility entrepreneurs, raising money is a never-ending process. Throughout 2021, when it reached a new high, its momentum remained uninterrupted despite supply-chain imbalances, market turbulence, the second wave of COVID-19, and growing apprehension over its new variation, Omicron.
Due to local limitations that resembled a lockdown and decreased economic activity, EV companies only raised USD 78.2 million from roughly ten agreements in the first half. The second half saw the announcement of the majority of the largest investment rounds as market conditions stabilized and Indian startup investors experienced a significant uptick. Startups that received the most funding in the just finished year were Detel ($20 million), Blusmart ($25 million), Simple Energy ($21 million), Ola Electric ($253 million), and Simple Energy ($21 million) (USD 20 million).
Key Technologies: Making India a Leader
In funded startups in india investors are deeply interested in the blockbuster technologies such as AI, Blockchain, robotics, advanced analytics, IoT and cyber-security. All have seen India's tech muscle. A new unicorn was minted every ten days in India in 2021, and it has become the third-largest startup nation in the world, next only to the US and China. India, the second largest emerging market for AI, has previously lagged behind other markets such as China. India has emerged as a leader in key technologies, including AI. As per the industry estimates, India is expected to attract over $1 billion in investment by 2023 in this segment. Europe, the US, and China are currently ahead, and India ranks eighth in terms of private investment in AI. However, this is expected to change soon. A recent Deloitte "State of AI" survey indicates that the majority of Indian enterprises intend to boost their AI investments. The industries that used AI first were telecommunications, healthcare, financial services, and retail.
Key Technologies: Making India a Leader
Over 4,500 companies working on emerging technologies have received recognition from the Department for Promotion of Industry and Internal Trade (DPIIT). These firms work in cutting-edge industries like robotics, artificial intelligence, analytics, and the Internet of Things, among others. In order to develop capacities in emerging technologies, the Indian government built 26 centres of excellence (CoEs). These CoEs play a crucial role in fostering innovation in new technologies.
The growing industries attracting India venture capitalists' interest have successfully incorporated new technologies into established industries, offering ground-breaking answers to pressing economic and societal problems. The businesses and sectors will be ones to watch over the next ten years, whether this is accomplished by developing software to connect and manage workforces, integrating blockchain technology into middleware, or fusing artificial intelligence and the pharmaceutical industry.