VC Predictions 2022: 10 Industry Trends We’re Tracking
From the creator economy to the future of work, M13 partners share their top 10 industry predictions.
By M13 Partnership
Last Updated: December 16, 2021
Published: December 10, 2021
As investors in the innovations that will change consumer behavior over the next decade, we’re always looking for startups that will transform how we live, work—and play. Here are the 10 industry trends and investment areas that we’re excited to track in 2022:
A fundamental need to build resilience will create new opportunities.
2021 was the year of resilience. When we think about resilience on the largest scale, it’s our climate—and 2021 may have been the tipping point for the mainstreaming of climate tech. In venture capital, we recognize that market timing is essential. Now feels like the moment for technologies and new business models that combat climate change to take hold. We're interested in ideas that get consumers closer to the solution.
Resilience is the word for 2022. Over the past two years, we've witnessed the fragility of everything from our healthcare systems to our supply chains to our climate and even our own mental health.
Consumers are also looking to build resilience—to shore up their own mental and physical health, to solidify their emergency financial resources, to make their homes more resistant to extreme weather events.
And on a more fundamental level, we’re all looking for mental resilience—for solutions to chronic anxiety and stress. I'm closely following innovations in women's health and wellness. The rapid adoption of telehealth (combined with better diagnostics and a growing awareness that women need tailored healthcare solutions that go beyond reproductive health) are factors in creating big opportunities in what we've come to call femtech. Women are also looking to take control of their own health through diet and supplements, and they’re looking for community around shared concerns.
We’re seeing unprecedented innovation in all of these critical areas. Investing in companies that offer resilience in any category is a great place to focus for 2022.
How we measure success at work will change.
With the tectonic shift in how, where, and why we work over the past 18 months, it's no surprise that HR tech companies are among the most heavily funded and highly valued of late. The area I’m most excited about exploring is a deeper dive into what "work" actually is—and how companies and employers evaluate the way they assess talent and performance in the new world of work.
I believe we’ll be seeing a much richer, deeper, and healthier focus on the attributes of high performance, and the skills and competencies needed for measurable success. As the location of work moves from in-office to distributed, companies will need to truly focus on what matters for delivering value: removing politicization, presenteeism, and other aspects that have little impact on a company’s trajectory.
In line with this shift, the next generation of HR tech startups will create richer methodologies to measure top talent, both at the hiring stage and across the employee development lifecycle. This will enable companies to improve their selection processes with better skill assessment and talent matching—and enable a deeper focus on meaningful career development thereafter. We know these areas drive engagement, retention, and ultimately performance, and I'm excited to see all the exciting breakthroughs to come in this critical space.
Creators will help fuel the Great Resignation.
The "Great Resignation" of 2021 will continue into 2022—in addition to the impact of the pandemic, the creator economy continues to grow and shift our cultural mindset. Workers are redefining on the fly previous definitions of work and career. There's also market validation that a sustainable living can be made as a creator. I continue to be excited by the growth of both sides of the creator marketplace: the increase in new and savvier creators, as well as the rise of platforms and technology tools that allow these creators to monetize their efforts.
Venture will continue to see and fund the proliferation of smarter creator technology and innovation. These innovations, along with this mindset shift, will fuel the Great Resignation.
Consumers will start monetizing their personal data.
The success of influencers proves that we were ready to democratize the monetization of content by supporting various platforms where anyone can freely publish sponsored content or directly monetize their following (e.g. NFTs or M13 portfolio company Clash).
Consumers have shown that they’re receptive to "pseudo organic" advertising by influencers, and they’ve increased the share of their "eyeball minutes" they allocate to these influencer-heavy channels.
I believe consumers have shown they are by and large open to "pseudo anonymous" data collection, aggregation, and utilization … as long as they have visibility and control (total or selective—the perception is what matters), and as long as they have an incentive or reward (real or perceived, direct or indirect).
The creativity here lies in how those incentives and rewards are structured so as to maximize economics for the brands that will figure it out and win as a result.
Just as consumers have willingly connected all of their finances via Plaid and given one bank insights into their entire financial picture, they’ll flock to products promising them exclusive content, limited NFTs, or simply a 10% off coupon. Consumers will agree to connect their relevant behavioral data and selectively grant access to the brands and publishers they deem to be worthy.
Forget about "if" this will happen—"when" someone creates the technology and the single button to do the aggregation, consumers will be fighting to press it. At the same time, consumers will cut off and restrict data collection in places where they have no visibility, no ownership, and no incentives.
What's going to be the "Nielsen Family" of the 21st century? Will we be proud of the name of the data collective we choose to aggregate and sell our data on our behalf? How creative will these platforms get when vying for the loyalty of their panel members' directly attributable, life-encompassing data? 2022 will be the year we not only regain control over our personal data but also start monetizing it.
Companies will have to adapt to consumers’ growing power.
“Consumerization of everything” is the new “software is eating the world” as global businesses enter a new phase. Power is shifting to the consumer—take M13 portfolio company Northstar, which is redefining financial wellness as an employee benefit. Company benefits used to be business-led “you get what you get.” Compounded by current labor shortages, companies must now cater to the desires of the consumers and look at the longer pipeline of B2B2C.
Gig workers will find new ways to earn digitally—and globally.
The gig economy will be transformed in the next 24 months. The new frontier is global and will not be bound by local regulations. Long gone will be the days of fighting with the local taxi commission. Driving a stranger around in your car will still be a viable and flexible way to generate income, but new (and more enjoyable) methods will emerge. Play-to-earn gaming is the first breakout category, but there will be many more that allow people to earn digitally in novel ways and in communities with vested interests that know no borders.
Evolving work-life balance choices will continue changing the world.
As we think about consumer behavior, we have to consider how younger generations are choosing to work and live. The millennial and Gen Z generations are taking more control of their lives, insisting on quality of life ahead of difficult career choices—and businesses are accommodating this change.
What began as a simple remote work trend has now exploded into a huge independent worker trend. Whether as a gig worker or simply choosing where and when you work as well as who you work for on a fluid basis, the next generation owns their time and their allegiances more than ever before.
As with all consumer change, this drives a significant amount of new products to help manage and optimize these choices. We see this in everything from fintech and individualized working SaaS tools as well as property management and a reimagining of the physical workspaces.
Brand, content, media, and influence will continue to be essential to the success of consumer tech companies.
We’re committed to building a great venture franchise, and a central part of our thesis is to build a marquee name in Los Angeles. After San Francisco, the world in tech revolves around LA, and yet the city has long been underestimated. Most people don’t realize that well over $275 billion of value has been created in LA in the last five years with companies like GoodRx, Thrive Market, Dollar Shave, Snap, Riot, Ring, The Honest Company, Cue, and others. LA has what many other cities don’t, and that’s the best innovations in brand, content, media, and influence—all critical to the success of consumer technology companies, which have been growing like palm trees here.
Human capital—including investor-founder fit—will matter more than ever.
The venture capital industry has not been spared from the accelerated changes that hit all aspects of our before-times world. The influx of eye-watering rounds of financing has resulted in competition from nontraditional investors—and more opportunities for founders. While founders continue to build and raise, I’ve noticed a slight change in how they vet potential investors. Founders are starting to ask out loud questions that were previously mulled in private: “Are you my forever partner? Do I want to be in a long-term relationship with you?”
I’m being a bit cheeky here but investor-founder fit is a real consideration—and good for the future of the industry. Founders are increasingly deliberating about the quality of relationship they’re about to enter.
How are you equipped to help me scale at this stage and beyond?
Can I count on you for nonjudgmental support?
When I’m stuck and can’t get up, are you my late-night call?
Alphabet’s technology will pioneer life-changing trends.
Voice transcription is getting increasingly powerful, with the new Android 12/Google Tensor chip adding on-device grammar and accent-capable punctuation and sentence structure. Soon composing emails will be faster with voice than with typing, and hesitant writers may find it easier to churn out novels while on their morning Peloton ride.
Companies' Zoom chat transcriptions will also become accessible and searchable to those not "in the meeting," and corporate hierarchies will flatten as a result. Real-time translation of those transcripts will empower international teams and global remote work.
Other interesting trends by Alphabet:
YouTube is seeing more direct response advertising as video commerce continues to evolve.
AlphaFold’s publishing of 100 million known proteins is on par with the first mapping of the human genome.