- The team at TechRound has collected industry expert predictions on what 2022 will bring for business funding.
- The COVID-19 pandemic has impacted, and continues to impact all major industries and has massively impacted how startups and smaller businesses operate and source funding.
- Here, we explore the predictions for what is to come for business funding in 2022, with opinions offered from a variety of experts in the industry.
2021 brought a variety of changes to all major industries, and meant that some companies found it harder to obtain funding than they would have done pre-pandemic. But what is to come in 2022? Here are our experts’ predictions for the upcoming year!
Our Experts Include:
- Ralph Rogge – Co-Founder and CEO of Crezco
- Michael James – Digital Consulting Director at Altus
- Nitin Sharma – Partner at Antler
- Dr. Christoph Klink – Partner at Antler
- Ilia Obtaztcov – CEO of Definder
- Jawad Nayyar – Co-Founder & Chief Vision Officer of DAO PropTech
- Hector Macandrew & Nicola Weedall – Co-Founders of Hydr
- Maor Fridman – Principal of F2 Venture Capital
- John Auckland – Founder of TribeFirst
- Huw Sparkes – Investment Executive at Midven
- Alexander Skalabanov – Co-Founder & CEO of Intellectsoft
For any questions, comments or features, please contact us directly.
Ralph Rogge – Co-Founder and CEO of Crezco
The amount of money companies are raising gets bigger and bigger each year, and the time between each raise gets shorter and shorter. There used to be a twenty-four month runway between each raise, now six months seems stretched. Nonetheless, not even a recession or economic shock would slow things down for long. There are too many secular tailwinds, from top to bottom.
If the source of the world’s capital primarily sits with pension funds, should the value of the pension fund drop by 20% due to an unforeseen market crash, the flow of capital into venture capital can still increase. It is as much about the change in asset-allocation as it is about the size of assets under management.
The vast majority of pension fund assets are still in bonds and vanilla equities. Year-on-year pension funds gradually increase their exposure to alternative assets, like venture capital, but the exposure remains a tiny proportion of the overall pie, say less than 5.0%. Should all the pension fund trustees in the world increase their venture capital exposure from 2.0% to 4.0%, by reducing bonds and equities by 1.0% each, the size of capital managed by VC firms doubles. Given where bond and equity prices are, this isn’t a crazy idea, regardless of how inflated you think the VC / start-up market is.
While at the bottom, more and more start-ups are being created, it is getting easier and easier, and the world is becoming more and more homogenised. So it’s a winner-takes-all environment and you can’t afford to take second-place. Capital alone will not see you succeed, but it’s undoubtedly a very important variable in the function.
Michael James – Digital Consulting Director at Altus
In capital cities around the UK funding for FinTech and InsurTech start-ups appears not to be abating. The litmus test for this is the sheer number of jobs out there for “well funded” start-up CTO’s and technologists in new payment solutions, democratisation of finance and identity.
It’s a long time since my days as an owner, entrepreneur and financial technology start-up, running on a shoestring with absolutely no one talking about series A, B or C funding. Now for a very different reason no-one is talking about series A & B funding, because funding early stages has moved into stealth mode. They are still happening, and if you want to get a feel for that you just have to look at the activity, as you can get your adrenalin rush and start up credentials shored up just moving from one FinTech to the next.
This is likely to continue for as long as there are good news stories out there, and the fact that some of the activity is hidden means the failures are not coming to the surface, while funders are still very much looking for the unicorns.
The interesting ones will be not the shiny high-profile ones like banks or savings platforms. It will be the solutions integral to running a business. Last year Snap Logic, an iPaaS integration solution provider, already well funded and with the backing of Microsoft to lend it real credibility (and by the way a super product) achieved a massive valuation of $1 billion (USD) as it raised a further $165 million in its latest funding round. This product won’t be something the vast majority of people will know or care about outside of technology, but if it follows through with its current potential it could well be at the heart of many businesses going forward. If I were placing bets on where the big money will be made this year, businesses like this with a solid foundation product would be where I would look first.
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Nitin Sharma – Partner at Antler
Cryptography, code and digital assets are challenging our conventional notions of everything from technology and money, to law and institutions. Web2 is broken. In Web3 and DeFi, there is a new Internet and a new financial system being built – with DAOs, crypto and NFTs as the building blocks.
One where users and communities will be in far bigger control of value creation, identity and data sovereignty. We believe the world is now ready for thousands of new founders to leverage this opportunity and create a decentralised Web3 that will take shape within the next 4-5 years.
Dr. Christoph Klink – Partner at Antler
There will be more companies created in the field of renewable energy, and more investment in the industry too. Energy transition: Rising geopolitical conflicts, the race to new and sustainable sources of energy and heterogeneous political approaches to traditionally stable sources of energy, like nuclear power, are endangering the uninterrupted energy supply and energy grid stability of industrial countries.
At the same time, off-grid infrastructure to supply energy to remote locations not connected to the electric grid are making huge advancements. Both trends will provide ample opportunity to connect more people to clean and stable sources of energy.
For any questions, comments or features, please contact us directly.
Ilia Obraztcov – CEO of Definder
We are at the point of the crucial change in capital raising for businesses. Tokenisation is an opportunity for a company to raise capital in fixed assets, current assets, or tokenise its intellectual rights. It all depends on the needs of a business and what they are willing to sell.
Tokenisation itself should make it possible to facilitate access to capital, as now it is necessary to spend both time and effort to raise money and work with several lenders according to their terms. In contrast, in the case of asset tokenisation, we go to the exchange and use the funds of thousands of potential investors and thus simplify the process itself.
We have seen digitalisation in many spheres of our lives, from the introduction of emails to uberisation of all possible services. And now blockchain is about to make a positive shift in capital raise. The speed of this change depends on the leading STO players. Our company has already selected hundreds of potential SMEs to offer their shares to retail investors, and we are ready to onboard thousands of companies in the EU and eastern Europe by the end of this year.
Jawad Nayyar – Co-Founder & Chief Vision Officer of DAO PropTech
We are extremely bullish about business funding in 2022, particularly the property technology space, for several reasons. As we are entering 2022 with the real estate market experiencing exponential growth, we are expecting the current positive trends to continue well into the next year. Considering the potential of our country, the government’s direction, and a very large young population defining futuristic real estate requirements, the new year promises to be an exciting one. This opportunity, however, needs to be curated towards what is essentially required by applying a use-case-based approach.
Innovation and technology are expected to be the key driving factors. The PropTech space is heating up, with terms like use-case, sharing economy, distributed ledgers, and data-driven decision-making becoming the new norm.
Keeping a close eye on the macroeconomic conditions such as GDP growth and employment levels, lending rates, and political stability, strong growth of 12-14% in mature real estate valuations is expected. Developmental real estate, however, might face a turbulent ride due to an overheated market and excessive supply in certain asset classes.
Technology will give rise to investment opportunities with multiple tech-based solutions coming to address the challenges within the real estate sector. For businesses and individuals alike, the potential is enormous.
With overseas Pakistanis and PropTech startups playing a pivotal role, and excited by the anticipated investment opportunities that lie ahead, the current Government is optimistic to attract foreign investment, a key ingredient to the real estate boom. The Federal Board of Revenue (FBR) has taken some necessary steps to channelize declared money being plugged into the real estate sector.
This supply-oriented market will naturally correct itself towards the year-end with the help of advanced use of data in 2022, and a use-case-driven approach. Data has long been one of the neglected verticals across the real estate sector, and we at DAO PropTech are fully equipped to embrace the opportunities that lie ahead.
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Hector Macandrew & Nicola Weedall – Co-Founders of Hydr
The Bank of England’s base interest rate has been extremely low for well over a decade. After rising from 0.1% to 0.25% in December last year, it is predicted that there could be two further increases in 2022.
With low interest rates in place for a long time, borrowing has not only been an attractive option for many businesses, it has become a habit. Need more funding? Get a loan. We are now in a period where the loan repayments for Government sponsored schemes such as CBILS and RLS need to be made, so businesses will need to keep a very watchful eye on their cash flow and net working capital.
It is widely accepted that the cheap borrowing era is coming to an end and businesses should seek alternatives to optimise their finances this year.
An extremely powerful, but often under utilised financial instrument is invoice finance. Rather than seeking external funding such as a loan, invoice finance takes the dormant capital lying within every company’s balance sheet – those issued, but as yet unpaid invoices (also known as trade receivables) and converting them into cash far earlier than the payment terms set out on the invoices themselves. We strongly encourage more small businesses to take a close look at just how powerful this will be for them.
Maor Fridman – Principal of F2 Venture Capital
With regards to sectors that will see an influx of funding in 2022, the first sector would be the crypto space. We are still in the early days of mature Ethereum infrastructure, and there is a lot of space to build infrastructures for decentralised applications. While I am still skeptical of just how mainstream this will be, it is certainly a market that will grow exponentially when it comes to funding.
Another sector that will see growth and an influx of funding is the security sector. As the crypto space and many other newer industries are being developed and the only constant is change, new security risks will soar. To this end, cyber will be dominant in 2022.
HR tech is an additional space I see demanding major attention in 2022 as many companies are facing major talent shortages. More specialised and developed tools will be in high demand to facilitate the growing competitive market to bring in talent.
When it comes to the market in general, it’s important to note that even if the federal government increases interest, majority of VCs have ample reserves to continuously support their companies- but once the public market aligns with the private market- I assume we will see a calming down of these crazy market conditions.
For any questions, comments or features, please contact us directly.
John Auckland – Founder of TribeFirst
2022 is going to be the year that blockchain converges with the mainstream. More companies will look to tokenise elements of their business, and we’ll see the maturation of the ‘IDO’ (Initial DEX (decentralised exchange) Offering). Decentralised Autonomous Organisations (DAOs) will become mainstream in 2022, and more companies will receive investment by selling DAO tokens rather than shares. We’ve already seen companies turning anything into an NFT, even when the use case isn’t appropriate.
We’ll start to see established private market investment platforms and crowdfunding start to identify how they can leverage Web3 technologies to improve their offerings, initially by introducing smart contracts into their existing processes to create greater control and efficiency.
With all these changes and the opening up of new ventures, no doubt regulatory reviews on either side of the Atlantic, both in terms of blockchain and tokenised investment, will come into place, particularly around financial promotion. In a heavily regulated and traditional market like the UK, we’ll start to see a revision of the decades’ old financial promotion rules to make them more suited to the digital marketplace. It’s already consultation at the moment, I believe.
In my opinion all of these changes will hopefully bring a better standardisation across the marketplace.
Huw Sparkes – Investment Executive at Midven
Any investor can provide cash; the best investors help you use it to equip the right strategy, execution, and people. With this combination, early-stage innovators are better placed to take risks in developing and scaling new technologies to solve global problems in key fields.
Web3? NFTs? Blockchain? Crypto? In my opinion there are arguably many more important technology sectors out there.
Venture stage companies are potentially the world’s best chance at beating the greatest challenges facing humanity today, including climate change, education, health, sustainable growth and security. Powerful investors all around the world are finally committing to supporting the best innovators in these fields – I would be surprised if investments in these key areas are not amongst the most significant in 2022.
That said, any company in any sector can pledge to make a difference to these key fields. The journey to net zero and genuine EDI policies is these days less a choice for companies, and more a necessity. By adopting the right policies and caring about the impact you and your business strategy have on the world, all companies can make a positive change. I hope that this year will see universal adoption of such policies and all companies take whatever steps they can to support net-zero.
And we cannot underestimate regional development in start-ups. While many of the UK’s recent headline-grabbing technology companies do hail from London or the “Oxbridge Triangle”, we mustn’t overlook innovation from the rest of the UK. Of course, I am biased towards the Midlands, working for a fund backed by the Midlands Engine, but I firmly believe that the regions have the capacity to produce world-beating and world-saving technology.
I still think London will play significantly in early-stage funding in 2022, but as more investors open regional offices in Manchester, Sheffield, Glasgow, and Birmingham, and seek the potential benefit of lower regional valuations, expect the balance will be further redressed.
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Alexander Skalabanov – Co-Founder & CEO of Intellectsoft
A massively disruptive year has set specific trends and highlighted several industries that received the highest ever funding; those include retail, fintech, sustainability, and unsurprisingly healthcare. These industries will continue to get attention from investors throughout 2022 and however long the pandemic lasts. As we look forward to 2022, I see two massive trends on the rise:
Companies with a triple bottom line focus on social good will see the most success.
Nowadays, having a purpose is more than a strong business advantage; it is a must. Customers are 4 to 6 times more likely to purchase from brands with a strong purpose, while 83% say that companies should only earn a profit if they also deliver a positive impact – and VCs are following the trend. Therefore, it is more crucial than ever to refine your purpose and mission and communicate it to the right audiences.
VCs are giving way to retail investors.
With the rise of fintech, we will surely see an influx of retail investments, as many solutions these days enable micro or fractional investments, making stock and shares of SMEs accessible for all. For entrepreneurs, this is another source of investments to consider. Combined with a strong purpose, communicating your values to retail investors – as well as VCs – is key in the long run.
For any questions, comments or features, please contact us directly.
