2 minute read
500 Global
CHRISTINE TSAI
CEO, 500 GLOBAL
We believe that private equity and venture capital (VC) fundraising will be as active – if not more so – in 2022 as it was in 2021.
Last year’s VC fundraising activity through Q3 alone surpassed 2020’s record, and is expected to break the USD100 billion mark by the end of 2021. As pension funds, endowments, sovereign wealth funds, universities, and high net worth individuals continue to seek increased exposure to private markets, we think the influx of capital into private equity and VC funds will continue at an accelerated pace.
Looking ahead, there are several global technology trends that we expect VCs will be watching closely. We believe an increasing number of firms will seek opportunities to invest in companies that are based outside of traditional tech hubs, both within and outside of the US, which also means investing in less obvious founders who come from various geographies, demographics, and backgrounds.
As a result, we will potentially see more US-based venture firms expand their physical presence in frontier markets, especially in Latin America and the Middle East. We believe firms that focus their time and attention on building strong relationships in nascent tech ecosystems are the ones that are likely to be most successful long-term.
We also believe that the momentum we saw in 2021 will likely carry over into 2022. Right now, deal activity is at an all-time high. Just in October, more than USD54 billion was invested in 2,000-plus companies globally. We’re seeing accelerated growth in the fintech industry. Venture capitalists invested a record total of USD39 billion in the first three quarters of 2021 in fintech companies. This already surpasses the USD20 billion raised for all of 2020.
While macroeconomic issues cast a shadow on the economy, we believe tech investing will continue to grow post-pandemic. We are backing entrepreneurs who are building innovative solutions to meet evolving consumer and business needs.
The world is still combating a global pandemic, which continues to pose a risk to populations and businesses in certain sectors, such as travel and hospitality, retail, supply chain and logistics, and more. There are social and economic challenges that investors and founders need to be ready to navigate in the year ahead. Inflation, which soared to a 40-year high in early December, is of concern, as bottlenecks in the supply chain remain an issue.
We are adapting our investment framework to reflect the way some industries that benefited from the pandemic initially now need to adjust given the recovery, and how others that saw activity grind to a halt are seeing signs of life. Despite challenges, we believe there are opportunities for a new generation of disruptive companies worldwide, as the pandemic accelerates digital adoption and a new era of innovation unfolds.
CHAPTER THREE
DEAL OUTLOOK
