The world of startups and businesses has a lot to do in 2022, after a year that has almost broken all records.

With the big caveat that of course we can’t predict the future – who would have predicted in early 2020 that a global pandemic would turn lives around the world upside down, but ultimately lead to a monster rally for the tech industry? our crystal balls and made our most informed assumptions about what 2022 will bring.

1) Venture capital funding will (mostly) come back to Earth

Global venture capital funding in 2021 nearly doubled from 2020, which was already the second-most important year on record for investment in startups. Last year, investors invested $ 643 billion in startups around the world as the pandemic boosted the tech industry.

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Funding at all stages was on the rise, but neither was the last stage of technological growth. Major non-traditional investors, including Tiger Global Management and Insight Partners, also aggressively invested Silicon Valley territory last year, overtaking investments from traditional venture capital firms.

Our prediction: The big question this year is whether we will see a recall in 2022. That seems unlikely, given the number of startups that are now overflowing with cash and considering exits, and the rise in interest rates that is. likely to create a more difficult environment for investors this year. While venture capital investment is likely to remain strong in 2022, we expect it to calm down a bit and be somewhere between the nearly $ 650 billion invested last year and the roughly $ 300 billion. dollars that we’ve seen in less heady years.

2) A strong IPO cohort will face headwinds

Last year, it also saw record revenue from public market offerings and featured some of the biggest startup IPOs of all time, including Rivian, Coupang, and Snowflake. In total, 2021 was the busiest year on record for IPOs, with 399 offers collectively raising $ 142.5 billion, according to IPO research firm Renaissance Capital.

But many of these newly public stocks have performed disappointingly over the year, and we enter the new year with the threat of rising inflation weighing on valuations as well.

Yet 2022 has a strong pipeline of highly funded IPO candidates – there are now well over 1,100 companies on Crunchbase’s board of directors – and mounting antitrust pressure from policymakers around the world. integer means that mergers and acquisitions have become a much less viable exit option for many of these companies.

Our prediction: Despite some headwinds, 2022 could match or surpass last year’s IPO market. We’ve offered our bets to 30 companies that we believe could go public next year, including Stripe, Tanium, Glossier, MasterClass, Plaid, and Instacart.

3) FinTech will continue its series of records

Global venture capital funding in 2022 nearly doubled from 2021 to $ 643 billion. Of that amount, no industry received more investment than financial services, which received at least $ 131 billion. Investments have gone into a multitude of sectors within fintech, from crypto trading to payment infrastructures to neobanks.

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The buy now, pay later industry has grown significantly in recent years, attracting more than $ 4 billion in venture capital investments last year, up from $ 1.7 billion in 2020, led by well-funded players such as Klarna, Affirm and AfterPay. But even as these startups seek to expand into new markets and partner with other companies, they face a new regulatory review of their business models that could hold back that growth.

Our prediction: With fintech fueling much of digital commerce in the pandemic world, investment in the sector will remain strong in 2022, with funding likely to go to the infrastructure layer, integrated services, consumer fintech, B2B payments. and, of course, cryptography.

4) Crypto investing will remain hot

The crypto industry has become its own heavily funded field, increasingly separate from the rest of the fintech industry. Crunchbase figures show that the venture capital funding of crypto startups last year totaled more than $ 21 billion, far exceeding the $ 3.7 billion invested in 2020. More than 30 new crypto unicorns have been released. minted last year, accounting for about three-quarters of all billion-dollar startups in space.

Our prediction: Industry watchers don’t expect crypto investments to increase this year, with investments likely to go into infrastructure, compliance, and analytics, among other areas.

5) cybersecurity is considering a recall

The digital world can be a scary place, but for cybersecurity startups it has created huge opportunities. Last year, the industry made an unprecedented $ 21.8 billion in venture capital investment, with the fourth quarter of 2021 also setting the all-time quarterly record.

Our prediction: Amid large corporate hacks and data breaches, more attack surfaces as more people work from home on less secure networks and new decentralized environments, including metaverse platforms and crypto, cybersecurity startups will have plenty of opportunities to gain strength in 2022. Investors we spoke with areas that will continue to generate interest this year, including personal ID security, auditing and practice. tendency to “shift to the left”, which aims to catch errors earlier in software delivery.

6) Proptech is ready for another great year

Real estate technology also had a record year in 2021. Firm-funded companies in the real estate and real estate technology arena raised nearly $ 21 billion, according to data from Crunchbase, and the industry saw milestones like the Procore IPO.

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All was not rosy – there was also the embarrassing collapse of construction unicorn Katerra, which had raised some $ 1.6 billion from SoftBank and other top investors – but, in the Taken together, the sector has benefited from both a pandemic-fueled home-buying boom and an increase in the digitization of office spaces to adapt to the new work environment.

Our prediction: The sources we spoke to say there will likely be more investment in real estate software surrounding construction and property management spaces, two areas that were notable areas for investment within proptech in 2021, according to data from Crunchbase. They also expect more consolidation in the industry as companies mature and seek exits.

7) Biotech investment gets a big blow in the arm

Of course, the pandemic has put the spotlight on the biotech sector and attracted increased investment to the region. (COVID-19 vaccine maker Moderna itself is little more than a startup.)

But investors and other pundits we’ve spoken to say it’s not just virus-fighting technology that’s causing an increase in biotech investment. Other areas, from breakthroughs in artificial intelligence to a new franchise on mental health issues, are also pushing for more venture capital investment in the health and biotechnology sectors.

Our prediction: Expect continued investments this year in areas ranging from AI applications for biotechnology, which can help researchers analyze massive treasures of data and simulate new treatments, to mental health and clinical trials. more accessible health diagnostic tools.

8) startups aiming to help us live longer will thrive in 2022

Isn’t all of this aimed at helping our species live longer, happier – or maybe just less miserable – lives anyway? While many startups claim to be working on breakthroughs that will change the course of human history, a small cohort of specialist companies are literally working on technologies that could potentially dramatically extend human lifespan.

Leading companies in the space that raised funds last year include Tempus, an AI-based precision medicine company, Cambridge Epigenetix, a developer of epigenetic tools and analyzes, and Chroma Medicine. , which focuses on epigenetic editing.

Our prediction: Experts say that in addition to the overall investment in biotech, startups in the longevity sector are likely to see continued investment interest in 2022, in areas ranging from neurodegenerative disease prevention to indexing of neurodegenerative diseases. age at organ regeneration.

9) The SPAC evening is over

Ad hoc acquisition companies, or SPAC, were all the rage at the start of 2020, with nearly 300 of these investment vehicles created in the first quarter. Blank check acquirers offered a faster and less complicated route to public procurement and were particularly attractive to startups in riskier but capital-intensive industries like electric vehicles.

Yet the overwhelming majority of venture-backed companies that went public through PSPCs in 2021 ended the year trading well below their former highs, Crunchbase News reporter Joanna Glasner found. in a recent analysis. Among the worst performers are auto insurance startup Metromile, smart glass maker View, and maker of tech-enabled baby care products Owlet.

Our prediction: The SPAC bubble had started to deflate in mid-2021 and the performance of these stocks over the year does not bode well for blank check companies to make a big comeback anytime soon. Instead, we expect most startups to head to public markets this year to do so through the traditional IPO route.

Illustration: Dom Guzman

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