Since last week we looked at trends from an LP perspective, this week will look at high-level trends across the Venture Capital space.
- Environmental, Sustainability, Governance (ESG): The rising prominence of ESG (especially the ‘E’ and ‘S’) will continue to impact the world across industries and geographies. At present, it is common for Venture Capital (VC) funds to link their investment strategy to sustainable development goals defined by the UN which can be found here. We anticipate this trend will continue and that VC firms will start using more robust frameworks for ESG integration and related analyses. If an IPO exit is on the horizon, fund managers should be aware that ESG disclosure rules by listing authorities and stock exchanges are becoming more stringent.
- Crowdfunding: Equity crowdfunding websites are here to stay and provide a great opportunity for entrepreneurs to access capital outside of the traditional funding methods. There are however a few downsides to be aware of. The set-up costs to get the pitch video and marketing launched are often steeper than entrepreneurs initially anticipate. Furthermore, crowdfunding does not provide access to business and industry experts the way the VC funding does.
- Crypto: 2021 and 2022 saw an unprecedented number of deals in regards to crypto. Whilst we think crypto is here to stay in some form or another, much remains to be seen and volatility is still a serious problem. It is still too soon to make predictions with a high level of confidence in regards to how the industry will develop over the next few years.
- Deep Tech, Space Tech, MetaVerse, Web 3.0: VCs with the experience and knowledge to properly leverage the latest technologies have the opportunity to leverage a first mover advantage and make big names for themselves in fields such as medicine, space, automotive, etc. Technologies like AI (Artificial Intelligence), Augmented Reality (AR), Virtual Reality (VI) have a lot of untapped potential and will be used to solve some of society’s greatest challenges in engineering and science.
- Geographic shift: The current conflict between Russia and Ukraine has made war a reality again in Europe. The downstream economic effects are being felt across the continent and globally. On the fundraising side, we have seen a heightened concern for CEE investments due to the conflict and predict this will continue. There are still great investment opportunities for LPs open to investing in this region.
We are approaching the mid-year point in 2022 and it will be interesting to see how these trends develop in the short and long term. What trends do you think are here to stay?