Venture Capital Trends for 2023

Venture Capital Trends for 2023

Integra Digest

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We anticipate VCs will be looking for opportunities in less penetrated ecosystems. Even some will venture to go outside of their geographical areas but sticking to their known sectors. On the consumer side new apps will emerge since Gen Z are always exploring new things and tech talent that left traditional firms will have more freedom to venture out and create their own programmes, for example leveraging generative artificial intelligence as a creator of content, writing code, and photo and video editing. On the enterprise side, full service of B2B apps will see a potential consolidation of the industry with a flight to "must have" rather than "cool to have" by businesses and executives.

This year will also be the year of focus on embedded finance solutions and infrastructure. Regulatory changes will keep taking place; giving more transparency to the financial services, open banking, payment infrastructure, leveraging on alternative data, but more importantly focusing on giving power back to consumers which will mark the path on the side of FinTech. Crypto is here to stay. Aside from recent crypto's winter, we are convinced of the potential of distributed ledger technology. Smart contracts and tokenization have the potential to solve real and day to day problems, thus we expect investment to keep flowing into this sector more consistently. 2023 may also finally see an adoption of crypto currency by central banks in an attempt to institutionalize it, but also to gain control on the regulatory side. The market for NFTs (Non Fungible Tokens) may too experience a renaissance this year after a rather disappointing 2022 - being down 90% by fall of 2022 in comparison to the previous year.

Cybersecurity will also remain a hot topic for both discourse and investment. Cloud services are just as comfortable as they are exposed, and as more companies rush to the cloud (McKinskey predicts that companies will move upwards of 60% of their IT estate to cloud by 2025); the market of cybersecurity will surely grow. Other new tech trends we can see are, of course, Web3 which we expect to see gaining a bigger impact and presence on social media and a more generalised daily application in the mainstream world. Investment into ClimateTech will also pick up, as the conflict in Ukraine continues to disrupt energy and commodity supply chains, and since global warming shows no signs of slowing down as we fail to stay below the 2 degrees Celsius target YoY. HealthTech will receive increased attention with an emphasis on mental and behavioural services becoming accessible online in lieu of their long-awaited inclusion as part of PHC.

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Reference:

[1] JP Morgan "Latin America Outlook 2023" (2022)

[2] Harvard Business Review (2023)

[3] McKinsey (2022)

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