Global venture funding is a major source of investment for start-up companies and seems set to remain so for many years to come.
Venture funding rose to $335 billion in 2020, but that figure was blown out of the water as funding nearly doubled to an eye-watering $669bn last year.
Global venture funding topped $160bn in the first quarter of 2022, putting it on course to smash through the $700bn if it continues at the same pace during the rest of the year.
Given the growth in global venture funding over the past couple of years, read on as we look at five trends to watch out for in 2022 and beyond.
Artificial intelligence
Artificial intelligence (AI) has been making its mark in business in recent years and adoption of the emerging technology will continue apace in 2022.
AI will be increasingly integrated into the heart of start-ups with a view to gaining better operational insights and offering better outcomes to customers.
Venture capitalists are likely to aggressively target start-ups that leverage AI in areas such as retail, distribution and warehousing.
Intel Capital, a sub-division of Intel Corporation, is amongst the VCs that have set significant funds aside specifically to invest into AI start-ups.
Green technologies
The 2021 United Nations Climate Change Conference (COP26) generated plenty of awareness around environmental sustainability and climate change.
The commitment by more than 40 world leaders to push forward with the uptake of clean technologies sparked inevitable interest from VCs.
Sustainable and green technology has traditionally been tough to monetise, but COP26 could be the trigger for change over the coming years.
Several politicians have called for tax breaks to be given to green VC funds, a move which would help to power growth in sustainable start-ups.
Smart start-ups
The challenges raised during the past couple of years highlighted several major flaws in how the supply chain functioned across various sectors.
Delivering goods to homes, electronics to manufacturing plants and food to supermarkets tested the infrastructure of many established businesses.
VCs will increasingly consider how start-ups plan to cope with adversity before deciding whether they are ripe for investment in the future.
Start-ups will be forced to prove their operations use the latest smart technologies to build flexible modes of operation that can withstand any future issues.
Look Beyond Silicon Valley
While Silicon Valley has traditionally bagged most of the venture capital and start-up market, other regions are securing a significant piece of the pie.
According to CNBC, Silicon Valley’s share of total funding has been declining since 2006 and this downward slide is tipped to continue apace over the next few years.
Austin and New York been making great strides with start-ups, while Asia is continuing to emerge as a significant threat to Silicon Valley’s dominance.
There are already more than 4,200 investment organisations located in Asia, with Pakistan, Bangladesh and India amongst the countries they are seeking to plough money into.
“I’m convinced that the VC boom for Pakistan is only the tip of the iceberg”, says entrepreneur Ahmed Bilal. “A rapidly growing population with increased disposable income requires technological localised solutions and investors are figuring out that this is time to jump and try to corner the market.”
The next decade can be crucial for South Asia and other non-traditional ‘frontier’ markets as population growth in the ‘developed’ world slows down, forcing investors to seek new markets.
Public market
Many respected analysts have forecast that the public market will be the main factor that will define global venture funding in 2022.
The early part of the year was particularly challenging, with technology stocks suffering hits that have made some VCs a little twitchy.
With inflation on the rise and numerous geopolitical issues to contend with, the public market has already had a bumpy ride this year.
If things do not settle down, this may lead the firms that have significantly expanded their VC portfolios in recent times to take a more cautious approach.
